Walking across London’s Canary Wharf last week, I was struck by both the size of financial services office blocks and the extent of new high-rise living accommodation for the 143,000 people employed there. The area is home to Europe’s largest banking cluster and continent’s biggest accelerator space for financial technology companies, Level39.
Moving any major part of this edifice following formal Brexit negotiations, which British prime minister Theresa May is set to trigger on Wednesday, will require suitor cities to invest heavily in infrastructure.
Dublin will struggle to meet any major influx of financial services personnel. Most European cities do not carry sufficient empty ‘fourth-generation’ office and living accommodation to handle a major move out of London by the financial sector. Notwithstanding bricks and mortar, or UK government lobbying, certain activities will inevitably exit London, such as the Eurobond trading, which handles 70% of global activity.
Frankfurt is most likely to benefit. Paris looks set to gain, as major banks such as HSBC move to facilitate eurozone clients. Dublin is likely to continue to build its investment funds cluster. However, occupying the interest of the Government once Article 50 is triggered will be the wider issues of cross-Border trade and free movement of people.
The all-important formal guidelines, which EU president Donald Tusk has committed to drawing up and then getting the remaining EU 27 member countries to approve, will be of vital interest to Ireland. These will show how hard a line the EU will take with the UK. More importantly, they are expected to specify the priorities for the EU 27, and the principles on which the EU cannot compromise.
Ensuring that Ireland’s common travel arrangements with the UK, as well as a frictionless border between the Republic and the North, are included in these guidelines is the critical challenge facing the Government. With a timeline of April 29 to approve the formal guidelines by the remaining 27 EU leaders, the need for early interaction with Mr Tusk is now vital.
Ms May’s 12-point Brexit plan, announced on January 17 in her Lancaster House speech, included “maintaining that Common Travel Area with the Republic of Ireland will be an important priority for the UK in the talks ahead’’.
It should be possible to have a similar commitment in the Tusk guidelines. However, the caveat included in Ms May’s speech, that “we will work to deliver a practical solution that allows the maintenance of the Common Travel Area with the Republic, while protecting the integrity of the UK’s immigration system” could prove a stumbling block.
Once the EU ‘guidelines’ are approved, negotiations will commence. The UK is expected to push for special treatment for London’s financial services sector and the British motor industry.
However, the UK is expected to take advantage of Brexit to open up its food market to low-cost supplies from Australia, New Zealand, and Brazil. The implications of such a strategy could be devastating for Ireland’s agri–food sector, which exports 41% of its output to the UK. Strong Irish representation in the talks will be vital in ensuring that proposed tradeoffs between the UK and EU don’t damage our special trading relationship with the UK.