For the first time in months, Brexit didn’t make it onto the front pages of the Sunday newspapers.
Instead, the fast-moving Westminster sex scandal has captured our attention. But with formal negotiations due to resume on Friday, the Brexit back-and-forth between officials on either side of the Channel has continued.
Reports yesterday (on the inside pages) suggest that progress is being made on finalising the UK’s so-called divorce bill, with Theresa May apparently prepared to commit £53bn to settle the country’s contributions to the EU budget, pension costs and development spending.
With an understanding about the UK’s financial obligations beginning to take shape, preparations for a future trade deal can shift up a gear. Preparatory work for this second stage of negotiations was given the formal go-ahead after the last round of talks, though in reality huge amounts of activity has been taking place behind the scenes for months.
The EU simply wasn’t prepared to discuss trade publicly until it had assurances on the money, but with a figure now beginning to crystallise there is an increased chance that substantial announcements on trade talks could emerge before Christmas. It may be frustratingly slow, but progress is being made.
Meanwhile, some of the City’s larger institutions have changed their tone as private conversations with officials begin to offer some clarity on the future of financial services. UBS, for example, was talking at the start of this year of moving 1,000 roles out of the UK, but the Swiss bank now plans to relocate only 250. This follows reassurances from policymakers on key elements of the bank’s trading operations.
We should expect other banks to revisit their initial estimates on job moves. If these back-room conversations can be matched by formal progress on transitional arrangements (for which there is overwhelming demand in the City) then the Square Mile’s nightmare scenario may be downgraded to a bad dream. Not ideal, but certainly not the calamity some were predicting. As William Wright of the New Financial think tank makes clear today, Brexit’s impact on the City is complicated and evolving, and must be seen alongside other long-term developments.