Wall Street concerns over Brexit grow
Kathryn McGuinness, policy chair of the Corporation of London, finds growing concern on Wall Street about the regulatory uncertainty surrounding Brexit
Presented by Kathryn McGuinness and produced by Fiona Symon
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From the Financial Times in London, I'm Patrick Jenkins, the FT's financial editor, and this is FT News.
Wall Street is growing increasingly nervous about Brexit. In particular, the level of worry there is increasing about a hard Brexit, a kind of disorganised departure from the European Union. At least, that is the conclusion that Catherine McGuinness, the policy chairman of the Corporation of London, has come back with from a recent trip to the US. She joined a small group of journalists at a restaurant in the City of London early on Tuesday to outline the messages she heard from Wall Street. Do excuse the background noise.
We [INAUDIBLE] a spot of our regular engagement with the US. I will be going out at least twice a year, but probably more regularly. We met with regulator-- but I think you've seen the list of people we've met with, but it was a range from regulators and market participants. We met with ISDA, and a number of them-- but ISDA, the Swaps and Derivatives Association. And we met with the treasury. Very interesting. I was out there in April, just before I took up office as chairman.
Then there was curiosity about Brexit and what we'll be getting up to. This time, those who are involved with our sector-- really, there was concern about the possible implications that-- the fact that it's taking us and EU-27 so long, the fact that this might have repercussions and implications beyond our borders, whether it's just disrupting markets or whether it's more significant than that. And, as I say, clear statement people were not going to take sides, but they were watching and were concerned. I think the fear of a-- [INAUDIBLE] hard-- I think that's really [INAUDIBLE] might be the fear of a crash.
Another point that Ms. McGuinness focused on was the interest that the US banks had in the so-called blueprint for a future UK-EU financial services deal that's been proposed by the IRSG lobby group. This is the thing that Mark Hoban, the former city minister, fronts. We've talked about before on the podcast.
And this is, as I say, a blueprint, which they are hoping-- certainly the city is hoping-- that the government takes up as a formal policy document, or something close to it, and then uses that as a negotiation basis with the EU. Wall Street very much liked this idea, but as Catherine McGuinness explained, she is getting frustrated, and they are getting frustrated, at the slow progress of turning this blueprint into policy.
I have to say, as with anything on Brexit at the moment, fairly slowly. People who look into it in detail respect the work that's being done. But I think we still have a bit of work to do to get it centre stage.
Both domestically and--
Both domestically and in Europe. Yeah.
So it's not been accepted as the blueprint for government policy?
Not yet. As I say, people have been positive. I mean, there are some in government who think that a simpler model might be possible, but I'm not sure that's right.
And I think-- I think there are still some who hope that an enhanced equivalents route might be possible. I think that, though, if we want a really aspirational relationship which works for us and for Europe, then the proposal, the bespoke agreement offering access, is absolutely the best way forward. My biggest concern-- our biggest concern at the moment is getting transition agreed as soon as possible with sufficient clarity that people can then rely on it-- that we need it, really, soon as possible.
Finally, among the many topics that Catherine McGuinness covered was the state of UK politics and how frustrating the chaos within government is to the whole Brexit negotiation process.
I think this is a moment when the country needs strong leadership and a clear direction. I think it's quite difficult for a divided cabinet to get that. I think it's very unfortunate that these other scandals have emerged just at this particular moment.
And I also think, as I've said consistently and as others-- [INAUDIBLE] and so on have said-- although Brexit was plainly a political decision, this is a moment where we need a really strong element of pragmatism in our approach, because we need to look at the damage we're doing to-- the damage we could do to jobs and the economy.
And, indeed, they are very warm when we talk to them. But we need action, not warm words. It's the same with the [INAUDIBLE] Florence speech, which was just great. And, actually, it's a little bit more than just warm words, because that has slightly changed the tone of the negotiations and the debate, and that's positive.
But we need action. We really need progress. And we need-- you know-- I mean, you will be fed up of hearing about the three Ts-- the talent, trade, and transition. But we really do need to see that.
This is an abridged version of the FT's "Banking Weekly" podcast, which you can download from FT.com/podcasts.