Nine months after the UK voted to leave the European Union the starting gun for the two-year process was triggered on 29 March, with an innocuous-enough-looking white envelope exchanging hands.
While the invocation of Article 50 provides a modicum of certainty, a period of limbo now ensues while the European Council reviews the UK proposals, until it publishes a draft consultation document on 27 April.
As things stand, how the process will pan out and the terms of the negotiations are still to play for. Indeed, Article 50 has never been used before, and Chancellor of the Exchequer (and former Foreign Secretary) Philip Hammond has warned exit negotiations could take up to six years.
In the interim the impact of Brexit on asset managers is a topic of constant conjecture. Last month the London School of Economics and Political Science warned UK asset management will be among the financial services hardest hit by Brexit. With around £6bn, or 25 per cent, of revenues coming from EU-related business, and the potential for half of this to “look for a new home”, the LSE says firms should look to open offices across Europe.
Indeed, Standard Life’s chairman Gerry Grimstone recently said the firm, soon to merge with Aberdeen Asset Management, is eyeing Dublin as its new EU hub. Meanwhile the Bank of England’s Financial Policy Committee has called for firms to prepare for Brexit to avoid disrupting market liquidity and investment banking services.
After a brief wobble the pound recovered from the trigger being pulled, and while sterling is around 15 per cent lower against the dollar and 10 per cent below the euro than before the referendum, a survey conducted by HSBC and Central Banking Publications revealed that the reserve managers at 80 central banks – who collectively oversee €6trn – now view sterling as a safer long-term haven than the euro.
On another positive note, advisers could be set to benefit from Brexit; research by MetLife shows that 67 per cent of advisers expect Brexit-related advice to increase this year.