Politics

Brexit Britain to lure investors in from around world with major economic ‘liberalisation’

Brexit: Market ‘liberalisation’ could lift currency says expert

Britain has been tipped to become a go-to-market for investors from around the world once regulatory divergence from the European Union has been achieved. Arnab Das, global market strategist at US investing firm Invesco, said the UK will see more “liberalisation” as a result of the Brexit process which will lift UK investments and give the pound a boost. Mr Das told CNBC the opportunity would come with some “cost to pay” but would result in Britain become a lure for investment.  

He explained: “As Boris Johnson grapples with this Brexit process I think we will see there is probably more liberalisation of the economy, some regulatory divergence.

“There will become cost to pay for that but if the administration can succeed in liberalising at least to some degree and maybe doing something to level-up the left-behind regions.

“We will have to look at that is has been tried and talked about many times in the past

“But those process should continue to lift the currency and continue to lift UK risk assets, property markets, construction, investment so forth. 

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“The UK should come back at least to a meaningful degree into the horizon of many investors from which it has been absent for half a decade,” continued Mr Das.

The economist’s predictions come after Chancellor Rishi Sunak promised a post-Brexit “Big Bang 2.0” reminiscent of Margaret Thatcher’s deregulation of the financial markets.

Senior EU official Mairead McGuinness had hinted that she had perceived Mr Sunak’s words as a move towards a bonfire of regulation.

At the time the eurocrat said she would not grant “equivalence” to UK financial services until the UK gives more information on how it plans to deviate from EU rules.

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She said: “The whole purpose of Brexit was to diverge and, you know, we need to know which road, the UK intends to diverge on and how many branches there will be on that path.”

“What we want to have as effective regulation, we do not like light touch and deregulation is not on our agenda,” Ms McGuinness added.

She also maintained that the bloc was being “prudent” by withholding an equivalence decision, which would see the EU consider the UK’s financial services regulations robust enough to maintain business links.

Senior figures in the City of London have warned that the longer Brussels goes without making a decision, the higher the risk of UK divergence from the bloc’s rules.

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The EU has granted temporary permits to allow UK clearing houses and securities depositories to continue doing business with European firms.

Eurocrats have argued this would help safeguard financial stability, but pushed for businesses to end their reliance on the City of London.

EU and UK officials are currently in talks with a view to agreement a framework for post-Brexit financial services cooperation by March.

Ms McGuinness said: “We don’t expect the City of London to diminish overnight, but we would expect that over time, the financial system within the EU will be stronger because we will want to reinforce our infrastructure.”

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