The financial services sector needs a shot of confidence to mitigate Brexit

To mitigate the hammer blow that the Brexit omnishambles have inflicted on the UK’s financial services sector, confidence needs to be rebuilt – and fast.

Indeed, even if there were now no divorce between the UK and EU, the damage to the financial services industry has been done.

As a result of several years of uncertainty, indecision, and no strong leadership from any parties, finance companies have been forced to undertake preventative action in order to maintain their interests.

This usually means moving parts of their business or key employees to locations such as Paris, Luxembourg, Dublin, Frankfurt and Amsterdam, or establishing legal entities within the EU.

In some cases, such actions have been carried out publicly. However, the full scope of the situation is unknown, as there are many cases that have not as yet been divulged.

Furthermore, with no meaningful access to the Single Market, Britain’s financial services sector is getting ready for what has the potential to be a lengthy, steady fall.

Given that this sector makes up around 6.5 per cent of UK GDP, this will undoubtedly impact jobs and the government’s tax base.

As such, although the ongoing decline in investment, talent and activity in the UK financial services sector can be brought to a halt, and the situation may be recoverable, the real problem is the lack of confidence – which is falling fast.

Confidence needs to be rebuilt in the City. How, then, to revitalise it?

Establishing robust rules for the sector will be key. But more than this, to keep the City competitive and attract business to Europe’s second largest economy, I believe that the UK should move towards becoming the low-tax hub of Europe.

Corporation tax could be slashed to 15 per cent, income tax capped at 30 per cent, and tax breaks and state assistance for new businesses introduced. The list could go on.

Throughout the course of Brexit, the financial services sector has been insufficiently championed by the government. Politicians have long under-appreciated the importance of the City. It’s now time that changed.

The financial services sector needs to be supported – loudly and proudly – in parliament, as it currently appears to have no strong group of allies in government.

Financial services professionals were justifiably of the opinion that ministers would support their cause above other industries. In contrast, the sector has been sacrificed to safeguard manufacturing and guarantee an end to freedom of movement from the EU.

Considering that the EU accounts for around 20 per cent of Britain’s financial sector revenues, with half relying on full access to the Single Market, the UK should focus on establishing rules and taxes to keep the City competitive, in line with other global financial hubs such as New York and Shanghai.

Consequently, with a Brexit extension period almost certainly on the cards (now that the original 29 March deadline is “physically impossible”), the time has come to make a stand, support the City, and rebuild the confidence lost as a direct impact of Brexit.

It’s time to restore confidence in the financial services industry and go full throttle into damage limitation mode – with strong, unified support in government, and bold, pro-business policies.