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It’s been just over a month since the majority of the UK population that voted for the referendum on whether to leave the European Union has made its choice. As we now know the leave won.

During the past few weeks there have been tons of discussions on the repercussions of this decision on the economy and what turned out is that very few (and not even the UK government) have devised a clear plan on what to do in case the leave side succeeded. Whilst the referendum is not legally binding, it is hard to see how the UK government will ignore the decision of 17 million people that stated they want the country to exit the EU.


Leaving aside the truthfulness of the claims made during the referendum campaign and all the political implications, the main issue for a business based in the UK is what to do now. In order to start the process that will lead to the formal exit from the EU art.50 of the Lisbon Treaty has to be triggered. This will activate a negotiation process that could last for at least two years. There are a lot of question marks around this exit process as it is the first time that a member of the EU decides to withdraw from the Union.

If you are a business based in the UK you may feel like you are in limbo: in today’s fast paced economy two years are an eternity and waiting to see how the negotiations end is a very risky strategy. Get ready now, be proactive and go through some serious scenario planning.


When it comes to the Brexit one of the most impacted sectors is financial services: London is the central hub for the FS activity in the EU. The City of London has gained its status over the past 30 years mainly due to the conspicuous US banks presence thanks to the EU principle of “passporting”, which allows them to access the European single market without restrictions. If the UK leaves the EU this principle may be withdrawn.

That is where scenario planning is key: as a business you have to take into consideration all the possibilities in order to plan your next move. What follows is a very simple scenario planning, in reality it is a complex activity that has to be carried out carefully.

  • Worst case scenario: the UK leaves the EU and is unable to negotiate the access to the single market. Possible consequences:  clearing houses outside the eurozone could be banned from handling the euro and the City of London could lose its euro business; foreign bank leave London and move their HQs and main operations to the EU; difficulty to attract investments. From the talent pool point of view it will likely become harder to attract and retain the best talent + additional costs linked to VISAs for EU citizens.
  • Best case scenario: the UK negotiates its exit and joins the European Economic Area.  In this way the UK retains access to the European Union’s single market, but it has to abide to much of EU law, including the free movement of people. If you are a business based in the UK very little will change. However, you would have to consider the backlash for the government in terms of the population that voted to leave and that may see nothing more than a cosmetic change being the free  movement of people principle intact (immigration was one of the main point of contention for the leave side). There could be political and social instability that may have a detrimental impact on the economy.

You also have to consider the scenarios in between these two extremes. At this point no one knows how the negotiations will go (and not even if art. 50  of the Lisbon treaty will actually be triggered).


Lead the change, don’t react to it. 


If you are a big business in financial services based in the UK what can you do? There is not a clear cut answer. One thing for sure is that you have to carry out the scenario planning as soon as possible: it is a priority. Based on the outcome plan the next move. One thing for sure is not to wait and see what happens with the (potential) negotiations. Some of you may think “Well, but what a waste of time and money. If the UK enters the EEA it will be OK“. Let’s remember that the future is uncertain and that it is the time to be proactive and not reactive. Lead the change, don’t react to it. 


Starting with the worst case scenario (and scenarios that would see the UK not being allowed to stay in the single market) you would have to look at moving some of the activities to Frankfurt or Paris, the two main financial hubs in the EU, and if other locations are viable. The choice will be made, amongst other elements,  on the basis of infrastructures, systems, costs and local legislation: from how easy it is to set up a business, to corporation tax, to employment law.

An assessment will have to be made as to which activities can be relocated and how this is going to affect the operations, the systems and the business as usual. I strongly suggest considering how to maximise the use of flexible working and technology.

When it comes to people, a specific assessment has to be done on employment legislation. In countries like France and Germany it is nearly impossible to dismiss an employee and this can be an issue: employment law is very protective and leaves very manoeuvre when it comes to headcount. The countries are also heavily unionised and strikes are not unusual, especially in France. The only country that has an employment legislation similar to the UK is Ireland: it is also favourable on tax grounds. However it does not have the infrastructure required to sustain a financial services move “en masse”.

An option could be to have the different functions and operations (whether front office, middle office and back office) in different locations across the European Union, leveraging the use technology and making the best of local legislation (whether company law, employment law, tax law, etc).


It is likely that in the near future we will get to a point when where an employee is based is irrelevant. Of course when it comes to financial services there are issues with data and systems security, but it is time to think about how to take the industry to the next level.

It depends on how you see the Brexit: on one side it can be extremely disruptive, but on the other it can be a great opportunity to grow your business and get a competitive advantage. The only thing that it is not advisable to do is to wait and see how the negotiation process ends. Two years may seem a lot of time, but when you deal with major transformations it is not that much. There are so many implications (legislative, technological, organisational, cultural and related to people/talent) to consider that it is a very challenging task.

The businesses that are more successful are those that can manage change, and that can manage it proactively: the Brexit can be a great opportunity to improve your business model and to find alternatives that in the end may be even better than the current situation.



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