It was Grexit, now it's Brexit.
The possibility for of Britain 'exiting' the European Union has been a talk for British and anyone else whose assets are tied with the UK.
While the outcome isn't apparent just yet, there are various scenario outcomes that come up from mainstream media.
What happen if Britain leaves the EU
Many advisers and analysts have indicated that there are going to be inevitable business/finance/economy changes if Britain exits the EU, for example:
- - The potential loss of 45,000 London jobs (including HSBC's 1,000 investment banking jobs, moving operations from the UK to France.)
- - Financial service clients will 'flee' to EU onshore jurisdictions, such as Frankfurt and Luxembourg.
- - UK economy will potentially experience a “shock”: The currency will depreciate significantly, causing the decline of foreign direct investment, a jump in inflation and eventually – lower interest rates.
- - Rising costs – i.e. If British withdraws from the EU, there will the end of the era of cheap flights.
However, for the sake of not picking sides in any ways, we'd like to highlight what Brexit means to offshore banking, especially in the UK.
Brexit: The demise of the offshore banking sector in the UK?
While the “demise” of the offshore banking sector is arguably a strong word t use, there's a tendency that the sector is going that way, sooner or later.
Although the “demise” isn't kickstarted by the Brexit, withdrawal from the UK will disrupt offshore banking even more. How so?
Once was considered as a jurisdiction that offers great benefits to foreign investors who want to establish a presence in the UK (read: low tax, many bilateral treaties and stable economic/politic situation), the UK is starting to 'distance' itself from the 'offshore' status.
Although UK financial sector is technically open for both the UK and non-UK residents, in practice banks are starting to refuse non-UK clients. Since a couple of months ago, we found that opening a UK bank account is challenging for non UK-residents. Banks are now refusing to open an account if the director, shareholder or beneficial owner is not a UK resident.
Despite the fact that UK's company formation fees dropped to GBP 10 - way below average among industrialized countries – things are not as simple as it was for foreign investors, indeed.
Those issues, along with the potentially messy breakup between UK and EU, will push businesses and individuals to consider their options. Ireland, Isle of Man, Jersey and other nearby jurisdictions will become more attractive to investment managers and investors.
What do the Brexit's potential economic impacts mean for the rest of us?
While companies, firms and investment managers are getting prepared to leave the UK, what should the rest of us who want to protect our assets do?
If you're an account holder or having a business presence in the UK, you may want to consult with your lawyers and agents on what to do next; find out whether there's a change in laws and regulations that will impact their assets and business ventures in the long run and decide on you next steps.
The impact of Brexit is not only felt by the UK residents, but also by those who are establishing a business presence or protecting their assets in the UK. There's a long way to go, as Brexit talk is still in progress. However, it's always a good thing to be well-prepared with your decisions regarding your UK-based assets.
If you are still considering your options, you can always consult with us (completely free) for recommendations and insider info on a particular jurisdiction.