Following warnings about the effect of hard Brexit on the UK economy, both the UK Prime Minister, Theresa May, and leading credit ratings firm Moody’s have responded with a more upbeat take on Brexit.
To start at the beginning there is passporting rights, which enables banks from one location in the EU to trade across the region without having to set-up offices or branches in each country they operate in. Jens Weidmann, boss of the Bundesbank – Germany’s central bank – and a highly influential banker, had warned that if the UK chose the hard Brexit route, London would lose passporting rights and as a result lose its position as the world’s premier financial hub.
There is good news. Moody’s disagrees. “The direct impact is likely to be modest,” it said.
Moody’s, which is one of the world’s top three credit ratings agencies added: “The greater impact would be felt through higher costs and diversion of management attention, as the companies concerned restructure, reducing profitability for a time.”
It qualified: “This is credit negative but manageable. And other critical factors such as capital and liquidity, which are largely determined by global standards, are unlikely to face material changes due to Brexit per se.”
Meanwhile, Theresa May has entered the debate. This time she was responding to comments by senior politicians from Poland and Slovakia, suggesting that these countries, along with Hungary and the Czech Republic, would block any deal with the UK that did not involve the free movement of people to the UK.
But Mrs May said: “The 27 will sign up to a deal with us. . . We will be negotiating with them. And as I say we will be ambitious in what we want to see for the U.K. A good deal for the UK can also be a good deal for the other member states. I believe in good trading relations.”
The Prime Minister was speaking as she embarked on her journey to New York for the United Nations General Assembly. It his thought that Mrs May will tell the assembly that the UK “Did not vote to turn inwards or walk away from any of our partners,” when it voted for Brexit, but that politicians needs to become more in touch with the concerns of the electorate and that “bold action to address” these concerns are required.