An Update on Brexit – The Blame & Anger Stage!

Is the EU holding the UK over a Phony Divorce Bill?

                                                                By: Tony Coe

Many of our international clients are avidly following the journey of Britain’s departure from the EU.  It’s like watching a soap opera, isn’t it?!  But what’s the latest and what are the implications for corporate moves? 

The EU can’t seem to get past its focus on demanding that the UK must pay a “divorce bill” of up to £100 billion.  (The figure changes all the time and the UK is yet to see a breakdown.)  Based on all the rhetoric that’s being flung around, this bill is to cover such items as:

  • Outstanding budget commitments i.e. development funding for Africa etc.
  • Contingent liabilities – in case certain states fail to repay certain loans following Britain’s departure from the EU
  • Several other EU budget items such as transportation projects that have already been agreed upon
  • €520m in relocation costs- relocation of over 74 EU institutions including the London based European Medicines Agency (EMA)

And the bill even incudes the costs of EU officials pensions- whether Britain is responsible for that cost is certainly up for debate!   

The motivation behind the EU’s unproductive focus appears to be this.  The UK must be punished for leaving the EU in order to set an example to other states who might be thinking of defecting.

At the same time, the EU is spinning its messaging like crazy in a vain attempt to undermine London as the world’s most important financial centre.  Conflicting bits of spin arrive in my inbox daily claiming that different EU cities are claiming to have won the battle to replace London as the financial HQ of the region.  One day it’s Frankfurt, the next its Amsterdam, then Dublin, Paris and on and on we go!

This relocation firm moves a lot of bankers around the globe and, so far, we’re seeing no concrete evidence that any financial services giants are planning on moving a lot of people out of London.  Quite the reverse.  Sure, there’s a lot of corporate posturing going on that’s aimed at encouraging a settlement between the EU and UK that’s good for business.  But we’re seeing major companies moving many people into the UK and we’re seeing corporations expanding their London presence.

The fact is, this really is proceeding like a real life divorce!  The spouse who perceives themselves as the abandoned party is acting out and throwing tantrums instead of getting on with the business of sorting out all the things that need to be sorted out in the children’s best interests – and so that both parties can move forward successfully.

Ultimately I believe that will happen.  But progress is not being helped by a UK government that has been severely damaged by its poor election outcome.

Until the negotiations progress to a serious stage where both parties have realized that a good deal for both sides needs to be achieved, businesses can’t make major relocation plans with any confidence.

Going back to the matter of the divorce bill, it’s my understanding that there is no legal obligation on the UK to pay anything.  However, the UK government has indicated that it’s willing to pay something in any event.  But like any negotiator with their head screwed on, they want other aspects of the overall deal to be worked on at the same time.  Instead the EU, for the moment at least, prefers to cry and smash up the furniture!

Let’s hope for everyone’s sake that they get past the “blame and anger” stage.

Whatever your views on Brexit, what’s certain is the the UK is not closing its borders.  The UK is open to talent from everywhere in the world and will continue to be so.

If you are a business relocating employees internationally, be sure to talk to us. 

Please do get in touch if you require further info.