The implications of Brexit

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“The challenges, opportunities, implications and considerations of Brexit are becoming gradually clearer to all,” said Chief Legal Officer of Dubai International Financial Centre (DIFC) Authority Jacques Visser during a debate.

It is important though that conversation around Brexit take place in as broad a context as possible and take into consideration all the factors of a changing world. The bigger emerging markets’ picture is essential here to help make informed decisions and consider future trends and opportunities,” Visser told a major Brexit debate with PricewaterhouseCoopers (PwC), hosted by the DIFC.

The event could not have come at a more appropriate time for the industry, and it was important to keep sight of the larger picture as firms consider their plans, he added.

Encouraging collaboration and knowledge sharing

Attracting over 250 industry leaders from across financial and professional services, especially banks, investors and investment banks, the discussions focussed on the implications of Brexit three months after the vote of the United Kingdom (UK) to leave the European Union (EU). The event was part of the DIFC’s ongoing efforts to facilitate debates and discussions on the main industry trends and developments as well as encouraging collaboration and knowledge sharing within its burgeoning community, according to news agency WAM.

The event, held at the DIFC Conference Centre, kicked off with a presentation from PwC, led by David R Cox, Financial Services Assurance Industry Leader at PwC Middle East and Julia Onslow-Cole, Legal Markets Leader and Head of Global Immigration, PwC UK, Mustafa Kheriba, Chief Operating Officer, Abu Dhabi Financial Group, and Tim Fox, Head of Research & Chief Economist, Emirates NBD.

Following the opening remarks, PwC made a presentation outlining the political, economic and regulatory implications of Brexit, and its impact on the financial services sector.

Essential part of UK’s economy

Cox focussed on the opportunities that are likely to emerge from Brexit, while stating, “The financial services industry is a vital part of the UK and global economy, and creative solutions can be found to preserve and promote significant growth in the market.”

“To date, the UK economy has not shown signs of significant weakness. Combined with the depreciation of the Pound, this has created an opportunity for continued investment from the GCC,” he said.

Global financial hub

On Brexit’s potential ramifications for London as a global financial hub and ultimately, on the UK economy, Cox noted, “Whatever happens as part of Brexit negotiations, the UK will ensure that London remains an attractive hub for financial services.”

“However, the single largest benefit for banks from the EU membership is ease of EU market access via ‘passporting’. Any possible removal of passporting rights would require the establishment of an EU registration,” he added.

Commenting on the significance of the Brexit debate, Onslow-Cole stated, “Brexit is a process, not an act – one that will have profound implications for individuals and businesses globally. The impact on the global financial services market and Immigration are the two hot topics to watch in the Brexit debate.”

The panel discussion that followed was of particular interest to those firms in the DIFC with strong connections to the UK. Around 15% of the 425 existing financial businesses in the centre come from the UK with a further 18% from Europe. These firms are attracted to the centre not only by its strong regulatory and legal infrastructure but also by the fact that DIFC acts as an integrated financial ecosystem for companies to tap into the $7.8 trillion Middle East, Africa and South Asian market.

Doubling trade figures

Visser recognised this while noting, “As the UAE leadership made very clear at the time of Brexit, it is committed to the broad and historic partnership with the UK as one of its major trade partners, not least in financial services. Between now and 2020 the two countries plan to double the annual trade figures of 12 billion Pound Sterling, with the UAE positioned as the UK’s 12th biggest trading partner. We need to work to find new ways of building multilateral trade and investment flows between the two regions and consider new structures for ease of doing business between Dubai, London and indeed wider Europe.’”

“The main transmission channels by which Brexit will impact the GCC and the Middle East region are likely to be through the direct implications of a weaker Pound on trade, tourism and investment, and to a lesser extent the indirect effect of this on other financial markets such as global interest rates and oil prices,” Fox observed.

Kheriba noted during the discussion, “Since the Brexit referendum, ADFG has been monitoring developments in the UK closely, due to the significant real estate investments held in prime Central London. Of course, there continues to be uncertainty as to how the UK will extricate itself from the EU, and to which destination these negotiations will lead. What is patently clear, however, is that London’s eminence as a leading global city, from commerce to culture, remains undiminished following the June vote, and ADFG will continue to seek out investment opportunities where it feels value can be attained,” according to WAM.

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