Breixt FUD is really making me mad

[Suff]

The Guardian is now soft pedalling the headlines it was trumpeting about how our Banking business could flee to New York. They took one statement from Jon Cunliffe and turned it into a whole new scare story.

Cunliffe had been saying how the EU would find it almost impossible to replicate London rapidly after Brexit happened. When asked if the business could move to New Your, he replied that it already existed there.

Right, so the UK will move out of the EU and lose it's Banking "passporting" rights so that our banks can do EU trades. And that Business will move to New York who is also out of the EU and doesn't have "passporting" rights.....

Yeah, right, I'm really that stupid. But businesses are not. They are not going to spend billions of £ or € or $ to move their staff and offices to spite the UK for leaving the EU. No, they'd move to the EU itself, Ireland probably.

However now that Ireland has proven itself unable to stand up to the EU on taxes, the chances of the UK banking moving to Ireland are, essentially, nil. The chances of the whole English Speaking business moving to Luxembourg are slim.

So why don't we see more of the CNBC analysis, done in July, which talks about the regulations for non EU firms having the same access as EU firms with one simple mechanism which works exactly the same as passporting? Namely that you are dealing with the EU as one banking block so you meet one regulation and it's done. Sounds a lot like passporting inside the EU doesn't it.

In fact companies outside the EU are already using this mechanism to have the same access as the UK gets today, it's how the New York companies operate in the EU.

What is the key requirement for these companies? They meet EU regulations for banking controls.

Of course the UK doesn't meet those regulations does it? I mean we're a rogue nation which does nothing the EU wants and applies none of the EU laws and abuses their internal open market. So we'll be thrown out on our ear and have access cut.

Yep I'm a total idiot so I'll swallow that one too.

Reality? There is a mechanism for "passporting" for banks outside the EU. Main condition is that they apply the same EU banking rules as the EU do. The UK already complies and will comply the second we leave. If our companies want to continue banking in the EU, they just make the application in good time and it is granted, before we exit, commencing the day we do.

Business as usual.

So why are we seeing all this rubbish in the press? Why is the BOE, essentially, making a mountain out of a molehill?

I think this comes down to three things.

The BOE has it's reputation to keep up. It needs the economy to go south to prove it was right

The last head of the BOE, speaking from the US, has said that what is happening right now (lower rates, more inflation, economic growth), is something that we have been trying to achieve for years and failing miserably. The more the BOE talk down the prospects the more the £ crashes and the faster the economy grows and inflationary pressures build.

The financial arena is still, even today, trying to force the UK to stay in the EU, if even by proxy. They think they can pressure the government into making bad decisions so that their lives are easier, no matter what it means. They have not, yet, accepted the reality that no party can survive the backlash of making a hash of Brexit just so a few companies can make more money and don't have to do the hard job of re-registering for access to the EU financial markets.

What is the end result of all of this?

Inflation will rise driven by increased import prices, especially Oil and Gas which are denominated in $; the economy will continue to grow and the labour market will become tighter and wages will rise above inflation.

This will "force" the BOE to raise rates and cancel their money printing.

The "fire sale" of the £ will come to a screeching halt, it will rapidly return to where it was prior to the Brexit decision and then continue it's rise above that level as it had slowly and surely been doing, year on year, prior to the decision.

At least 25% of the companies which based their business model on the new lower £ and exporting to countries around the world at a low £, without financial hedging, will go bust as their market dries up.

The £ will wobble and drop, inflation will remain higher and rates will remain or go even higher. People who do not have fixed term mortgages will lose their homes and people looking to buy homes on the lower interest rates will find it impossible. House prices will fall again pushing many home owners into negative equity for a time.

We have a name for this. It's called boom and bust. Something the BOE was given it's freedom to avoid. We're used to boom and bust from the politicians because they promise things they can't afford to deliver and try to deliver them anyway and we all pay the price.

For the BOE to do this to the country for PRIDE is something new. Something we haven't seen before. It's a new reality we will need to live with and, when the aftermath is analysed and the blame game begins, the BOE may find itself under pressure to become a department of the Government again.

Carney is playing a dangerous game. With our lives. I, for one, am not interested in it.

[Workingman]

So, if the EU does not get the cream from London following Brexit the US (NY) will. That is so reassuring, is it? It all looks rather like the UK losing out whatever we do.

When it comes to MiFID II there are other views to the one on CNBC, as one would expect.

Ashurst, for one, has a few things to say about banking, post-Bexit, and MiFID II.

The treatment of UK-based banks post-Brexit would depend on the exit deal agreed between the UK and the EU. If the UK were to leave the EU but not retain membership of the European Economic Area (EEA), as appears likely given the political shortcomings of the EEA model, the UK would become a third country for MiFID purposes. This would mean that UK-based banks and investment firms would lose their current passporting rights. If the UK did retain EEA membership, the passporting regime for banks and investment firms would be preserved, although the UK would no longer have any ability to directly influence future EU legislation despite being subject to it in many areas. There is no common third country regime under MiFID and each Member State has its own rules, so any third country bank wishing to provide services in a particular EU jurisdiction must either (i) itself be
established as an authorised entity in that Member State and authorised under MiFID or (ii) establish an authorised subsidiary in a Member State and rely on passporting rights across the EU.

This general passporting position is carried over into the second Markets in Financial Instruments Directive (MiFID II)1, which is
likely to replace MiFID in 2018. There are some significant differences between MiFID and MiFID II with regard to the treatment of third country entities. For example, MiFID II will establish two separate regimes for third countries doing business with EU entities, introducing different provisions for (i) retail clients and (ii) professional clients. In most cases.

A bank established in a third country seeking to do business with professional clients in a Member State will be able do so under MiFID II without establishing a branch in that Member State as long as it is registered in a register maintained by the European Securities and Markets Authority (ESMA). This is only possible where the third country regulatory regime is considered equivalent and a decision to this effect has been adopted by the European Commission (the Commission), so the effect on the UK would depend on whether its regulatory environment was deemed to be equivalent and whether the Commission could be persuaded to grant an exiting EU member this status3. In theory, the UK should easily meet the equivalence requirements, but the application process can be time-consuming and, depending on how pre-Brexit negotiations had progressed, could be
hampered by political factors. In particular, it would be possible for Member States and the Commission to take the political view that there was little advantage in providing an equivalence decision to the UK in financial services.

What we have is a lot of ifs, buts and maybes about what will happen during the negotiations and how rules will be applied. What is certain is that he markets and banks do not lile uncertainty and that will drive whether they stay in London or move to the EU or US. It is a three way bet with no certain winner, but one definite loser.

[Suff]

Yeah but come on. It's all Fear mongering. Business going to NY? Pull the other one. Why would _any_ business move 3,000 miles FURTHER away from the EU to a country where EU rules _already_ do not _fully_ comply with EU regulations and companies have to put special procedures in place to comply.

That is nothing more than fear mongering and nobody should be stupid enough to believe it.

As for the two pillars of foreign banking to the EU, business and personal, that's another misnomer. There is no such thing as cross border EU Personal banking. It does not exist, period. After all, if one of my French neighbours tried to open a UK bank account they would fail at the first hurdle. Proof of UK address. None? Forget it you are now an "international" customer just like an American. Ditto every other country in the EU. Think I can just go and get a German bank account? Think again.

Think you can pay a bill in Euro's in Germany with a French Euro denominated cheque? Think again. The EU has 28 separate and different banking systems, even in the Euro Zone.

So anyone who is trying to muddy the waters with "personal" banking is immediately suspect and not worth listening to.

The question here is the Passporting rights for Business transactions for Euro denominated trades in the value of Trillions of € per day. Of which the UK has the lions share. As it should, having the largest and most advanced banking trading systems in the world.

Do we really think that the EU is just going to _stop_ doing those trades one day and start doing them with companies set up in other EU countries under other legal and tax systems in different languages????

My credulity does not stretch that far. These guys can't even deploy the systems to meet the latest EU regulations for 2017 and are having to go begging to the EU for more time. Believe me I know, the CEO of the clearing house I was working in at Brussels had to send out an email to the entire company owning up to the abject failure to deliver and the fact that they were having to cut projects and initiatives designed to make the business better so that they could deliver 6 months late.

_THIS_ is the environment we are told will just up sticks and move to another EU country or the US???

As Dear Merv said just a few days ago. "Dream On".

[Workingman]

It is not stupid, to recognise that things could change in the run up to Brexit or immediately after, but it could be classed as stupid to think that all will stay the same. There are no absolutes in this and well placed people, on both sides, differ enormously in their beliefs of what the new landscape will look like.

The fall-out from Brexit will take years to settle, who knows how long. It could take three, five, even decades; it is unlikely to be sooner rather than later. I am not sure if it will be done and dusted in my lifetime, but I am sure that my children and grandchildren will be the ones having to live with it and mend it. It will need mending, that's for sure.

[Suff]

The only thing guaranteed out of this whole mess is that the end result will be the absolute Minimum everyone can agree to. Beyond that will be a case of negotiations when the pressure of no deal becomes intolerable and someone who makes big money is being hurt too much.

I'd Dearly love to see the Airbus flying without wings and a tail. Made in the UK from Carbon Fibre by a process which can only be made in a few places in the world because it's so difficult. Airbus was selling like hotcakes at the Paris Airshow. Hard Brexit will be something they fear. Greatly. Because they will have to fulfil those orders at the price negotiated. A bit difficult if the price of major components for the plane, which cannot be sourced anywhere inside the EU, suddenly jumps 25%.

What about the Austrian company that has just won the contract to build the Mini Clubman. Bit of a problem if they suddenly can't deliver at the price agreed. I noticed that the latest 3 BMW
investments in Mini manufacturing were all in Asia, not the EU.

In the press we see this incessant obsessing over the impact to the UK. Take a look on the other side of the fence and you will see much more fear. The UK has the entire rest of the world to look at for business. The EU? They have been able to sell into the UK easily because of our position in the EU. But, as I have said repeatedly over the years, they don't buy any UK goods or services unless they can't get them anywhere else in the EU.

What this means for the EU is that they face their own €100bn trade with the UK, every year, declining whilst being unable to stop taking UK goods at increased cost. Airbus components only being one part of the picture.

The negotiations for Brexit are only the starting point. From that point, we will then move on.

What I'm absolutely sure about is that the UK will trend further and further away from goods manufactured in the EU and more and more to the America's and Asia.

There are some interesting points in case here. Samsung manufactures a LOT of stuff in Brazil which serves the America's. Something which is not that well known. Should the UK do an open free market deal with Brazil, post Brexit, we could find our Asian goods coming to us from Latin America with lower transport costs and less tariffs.

David Davis is absolutely right. There is a whole world of opportunity out there but the only noise on the airwaves is excessive navel gazing about the impact of Brexit and how bad it will be.

I, for one, decline.