Brexit A Bust – And A Blow To UK’s FinTech Role?

Brexit Vote a Blow To UK's FinTech Role?

Down for the count, where the tally is 432 to 202.

And for Brexit, the question now becomes: What’s next?

The news came down late in the day (Jan. 15) in the U.K. that Prime Minister Theresa May’s Brexit proposal was voted down by Parliament, by the above margin. The vote is an effective period, or exclamation point, in the wake of a delay stemming from last year, where May did not have the votes to support the proposal.

We are barely 70 days away from the deadline for Brexit, depending on when you read this piece – and at this writing, any number of scenarios exist. There’s a no-confidence vote being spearheaded by the Labour Party. If May grabs support and withstands the no-confidence vote, she has to have a new Brexit plan on the table by the end of the week.

There also remains the possibility, of course, that a no-deal Brexit is what’s struck, and what sticks. The Irish “backstop” issue remains front and center, and has yet to be resolved. A second referendum on Brexit also may loom if the mechanics of the no-confidence vote and subsequent efforts to form a new government lead down that path. A general election would likely take weeks, and would bump up against the end of the March deadline for Brexit. Extending that deadline would require EU approval.

Uncertainty reigns. The prospect of a no-deal Brexit means that the U.K. would leave the union and the ripple effects would hit just about any industry – centered on goods or services – you can name. The U.K. would become a third-party customs entity – a far cry from the “single customs” relationship that would come into play with a Brexit agreement, complete with a backstop mandate that would keep a border between Northern Ireland and the Republic of Ireland.

For logistics and supply chains, including all manner of tech, items that are imported into the U.K. from the EU would face a lot more paperwork and taxes – and the reverse would be true, too, for goods sent from the U.K. to the EU. As any business owner will tell you, paperwork (and in this case, VAT) can slow things down. At least one firm, TransferWise, said roughly two years ago that it would move its headquarters away from London to the continent in the wake of uncertainty that is – especially now – the hallmark of Brexit.

Passporting, too, remains unresolved, as the “single market” in the EU would be no more, and banking and financial services would no longer be able to make the leap from country to country. FinTech, by some estimates, and as noted by Forbes late last year, represents as much as 10 percent of the U.K.’s GDP, and provides employment for as many as 1.9 million people.

The Tuesday vote sets the stage for any number of outcomes, and the fate, at least to some degree, of 28 nations hangs in the balance. The only certainty, right at this moment, is uncertainty.


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