May tries to appease American finance giants over Brexit

The UK prime minister, in town for the UN General Assembly, faces near impossible task

Theresa May threw open the doors of the UK's consulate general on New York's 3rd Avenue Tuesday, inviting the bosses of Wall Street's financial services giants in for coffee and Brexit muffins.

May, in town for the UN General Assembly, had a near impossible task on her first prime ministerial visit to the United States: to convince America's great and good that Brexit would not significantly change the investment case for the UK. She was accompanied by Boris Johnson, who in the Brexit debate accused President Obama of being anti-British because his ancestors grew up in colonial Kenya, but who – hopefully – kept such opinions to himself this time.

Unfortunately, May's charm offensive – at least as it pertained to the financial services industry – was undercut by figures released Tuesday in the UK by the Financial Conduct Authority (FCA), an independent regulatory body.

While May will have listened to the concerns of US investment banks, and no doubt offered platitudes, there is no getting around the fact that a Brexit solution which limits migration into the UK while retaining access to Europe of the City of London is a unicorn solution.


Cross-border business

The FCA said on Tuesday that 5,500 UK registered companies – almost all of them based in the City – rely on their British financial services “passports” to do cross-border business in the rest of Europe. Their ability to continue to operate will be severely curtailed if the UK plumps for an expected “hard Brexit” which sees it leave the single market, causing huge upheaval for the City.

According to the Financial Times, a draft consensus is forming around the idea that a hard Brexit will wipe 20 per cent – or around £9 billion – off the value of investment banking and capital markets in the UK.

This could be good news for Dublin, as well as for Frankfurt, Paris and Amsterdam, as financial services jobs migrate into the euro zone. However, the FCA study also found there are more than 8,000 financial services companies based in the EU or the European Economic Area which rely on reciprocal permits to do business in the UK, a group that accounts for 40 per cent of assets currently under management. Abolition of mutual passports will cause considerable upheaval for European insurers, asset managers and private equity firms who invest in the UK. As with much of the Brexit fallout, this too could shape up to be a lose-lose game.

While the prime minister willed her face to stay straight and sound confident in New York, Sport Direct's retail titan Mike Ashley was playing with a straight-ish bat in London.

Announcing new measures to clean up his retail empire's reputation as a Victorian workhouse, he couldn't resist letting slip to the BBC Breakfast show that he commutes to work in a private plane or helicopter because it saves time. And that he paid his cleaner a £80,000 bonus last year.

Ashley also claimed that he knew little of the working practices at Sports Direct's Shirebrook warehouse that led to staff there earning below the minimum wage as they were kept behind for personal searches after their shifts. Following a campaign by the Guardian earlier this year, Sports Direct pledged to abolish the controversial zero-hours contracts of its directly employed staff; however, as a majority of its workers are supplied by agencies, many will not benefit from these reforms.

‘PR nightmare’

Ashley, who is under public pressure to go further, on Tuesday conceded to demands that he bring in independent professional advisers to conduct a review of Sports Direct’s corporate practices, rather than relying on long-standing legal adviser Reynolds Porter Chamberlain.

The company has also announced it will have an elected employee representative on its board, in line with more worker-friendly practices in Germany and France.

Many describe Ashley, who also owns Newcastle United, as gaffe-prone and he is a self-confessed "PR nightmare". But while his spin doctors may wish to have it another way, the glint in Ashley's eyes says he never would. At least the cheeky pugilist/ honest fool persona seems to be working better for Ashley than for his friend and mentor Sir Philip Green.

Sir Philip – keeping his head down in the wake of the collapse of retailer BHS – avoided Top Shop’s London Fashion Week, once the highlight of his September social calendar. Perhaps there is only room for one PR nightmare on the high street.

Helen Power is a freelance journalist