It’s happened. The wheels for Brexit are officially in motion as U.K. MPs overwhelmingly voted to invoke Article 50 of the Lisbon Treaty. In this week’s Brexit Tracker, we see what may happen now that Prime Minister Theresa May has been granted the Brexit go-ahead, why consumers have pulled back on their spending and why Holland may be a surprise beneficiary of the U.K.’s FinTech pains.
Is It Brexit Go Time?
On Wednesday (Feb. 1), MPs overwhelmingly voted to give Prime Minister Theresa May the power needed to proceed with making Brexit a reality for the country. After a two-day-long debate, Parliament voted to trigger Article 50 by a majority of 384. With that, May can officially begin talks with the European Union about Britain’s exit.
Last week, Britain’s highest court determined that May would be unable to proceed with any discussions on ending more than four decades of European integration without a Parliament vote on whether or not the U.K. government could actually begin the Brexit process.
According to a report, the backing was expected to happen before the March 31 deadline to exit the EU, and the Supreme Court also ruled Scottish Parliament and Welsh and Northern Ireland assemblies would not get a say in the move.
In the ruling last Tuesday (Jan. 24), Supreme Court President Lord Neuberger said: “By a majority of eight to three, the Supreme Court today rules that the government cannot trigger Article 50 without an act of Parliament authorizing it to do so. Withdrawal effects a fundamental change by cutting off the source of EU law, as well as changing legal rights. The U.K.’s constitutional arrangements require such changes to be clearly authorized by Parliament.”
Well, Parliament made its authorization loud and clear.
With 498 lawmakers in favor and 114 against, the bill will now proceed to the revising chamber of Parliament, the House of Lords, and then eventually must receive a majority in the House of Commons before it can become law, The New York Times reported.
The Borrowing Slowdown
As a result of the uncertain future of Brexit, U.K. consumers made a significant slowdown in their borrowing during Dec. 2016. The drop, which was the first in five months, may be a sign of consumers’ efforts to rein in spending as the Brexit decision continues to drive up inflation, Reuters reported.
Economists surveyed by Reuters forecasted an increase of £1.7 billion in unsecured consumer lending in December, but the actual number rose by a net of £1 billion.
Despite the Brexit vote last year, Britain’s economy achieved the fastest growth among the world’s largest rich economies in 2016, which is believed to have been driven by household spending.
However, Reuters noted that the Bank of England expects that growth to slow in 2017.
“It may well be that consumers were buying big-ticket items in previous months ahead of increases in prices, but it’s very hard to tell from one month’s numbers,” Philip Shaw, an economist with Investec, told Reuters.
According to the report, Britain’s annual growth rate in borrowing dropped to 10.6 percent in December from 10.8 percent in November, which was previously considered the fastest growth in 11 years. The numbers depict the first fall in the annual rate since July 2016 and the biggest halt since Dec. 2013, Reuters confirmed. In addition to that, net credit card borrowing also had its smallest increase in cash terms since Oct. 2015.
FinTechs Say ‘Hello, Holland’
While many tech centers are ready and willing to jump up to top FinTech status as Brexit continues to jeopardize London’s reigning title, one surprising entry in the fight may just be the Netherlands.
As finance firms consider the possibility of moving jobs out of Britain, HSBC Chairman Douglas Flint recently listed the Netherlands as a possible destination for more than 1,000 jobs if Brexit negotiations are unable to lock down passporting rights.
“Logistically and geographically, it’s a great place,” Harry Waterer, a British commodities trader who recently moved to Amsterdam, told Business Insider.
“You’ve got the whole trucking network of Europe. You’ve also got the major sea ports in Rotterdam and Amsterdam, where a much vaster proportion of trade comes in via sea trade in comparison to the U.K. By being here, I’ve got access to a lot wider variety of products that I can then offer back to the U.K.”
According to Business Insider, other big businesses have also mentioned the hidden potential that Amsterdam has to offer. Last month, John Veihmeyer, global chairman of KPMG, said many businesses are considering the region as a result of Brexit, and Mitsubishi UFJ Financial, Japan’s biggest banking group, announced plans to drastically expand its Dutch operation due to Brexit.
“It’s very easy to settle in, everyone speaks English, people are very forthcoming and helpful. It’s a lot more accommodating to English speakers than somewhere like Frankfurt,” Waterer added. “Business-wise, it’s a smaller community. There’s a lot of competition, but there are a lot more opportunities here because you’re not stuck on an island. I can get on a train and meet a client in Germany in two or three hours. I can go to Paris i[n] three hours.”
Understanding its new opportunity to become the “new London” in Europe, the country is now targeting niche businesses such as clearing, FinTech and high-frequency trading.
This may have something to do with the Dutch Parliament’s efforts to bolster the country’s startup ecosystem through a growing number of initiatives and policies. Legislation is in the works that makes it both easier and cheaper to launch a startup in the Netherlands, as well as the country’s establishment of mentoring networks and residency programs aimed at helping entrepreneurs flourish, PYMNTS reported last year.
Though it may have a relatively small population, the country is known for its top tech talent and high internet penetration (94 percent). Not only has the government helped to foster a startup-friendly environment, but the Netherlands also offers favorable trade deals, a highly regarded education system, a strong economy and convenient location.