Most Read Contributor in Luxembourg, February 2017
It's 2025. BREXIT has been hard.
Transitional arrangements to ease the UK's departure from
the EU have ended. The UK's final agreement with the EU 27
could be categorized as Switzerland minus: a limited agreement
covering specific areas of access to the free market for goods, but
not services. Several free trade agreements beyond the EU 27 will
be finalized soon according to the government and will bring new
opportunities. However the macroeconomic situation triggered by
real BREXIT has made negotiating these agreements even tougher. The
pound has slumped to its lowest ever level against the major
currencies and continues downwards. The economy is stagnant and the
Bank of England seems to have run out of tools to stimulate growth.
The UK's goods are now so cheap outside the UK that cars and
other products are streaming out to the continent and beyond. The
only limitations on the UK's exports are the restricted
capacity of the UK's factories, the high cost of imported spare
parts and machine tools and a critical shortage of skilled workers.
Investment from abroad into UK manufacturing is growing from a high
level during the BREXIT process. Unskilled salaries are stagnant
due to high unemployment and the impact of automation so, despite
the high cost of imported components, returns are attractive.
Imports to the UK have fallen drastically. Fewer people can
afford to buy products from abroad, especially premium items such
as German cars. Tariffs have increased on some imported goods but
this is a minor issue compared to the huge impact of the decline in
sterling on the cost of imports. Any hopes that German
manufacturers would help the UK to obtain a better deal with the EU
to maintain access evaporated as the Germans realized that the
price of their cars in the UK would rise to generally unaffordable
levels. As with the Japanese, their focus switched to investing to
maximize output and efficiency of their existing UK plants.
The outlook for the logistics sector is mixed. Manufacturing is
booming, especially for export. Supply chains have become far more
complex post-BREXIT enhancing demand for the skills of dedicated
logistics specialists. Yet this positive effect is offset by the
significant fall in consumer demand. Shops and retail parks are
suffering. Consumers limit themselves more and more to avoiding
non-essential items. So there are fewer goods and produce to shift
around the country. E-commerce is also plateauing as people
hesitate to buy new or unnecessary gadgets. Outstanding consumer
credit has reached record levels so the banks are reluctant to lend
more to sustain domestic demand.
London is as ever a separate story. Hotels, restaurants and the
shops of Oxford, Bond and Regent Streets, Carnaby Street and Covent
Garden are packed with tourists. Trophy hotels remain trophies.
Move east from the buzz of the West End and one finds a very
different situation in the City of London and Canary Wharf
districts. Banks can no longer passport their services into the EU
so continue to move employees to new bases within the EU 27. In
particular US and Japanese banks with no historical ties to the UK
and upset that their warnings were ignored have been actively
moving their operations outside the UK. The boom in the City since
the 1980s, built on deregulation, ease of doing business and, above
all, easy EU access, seems over.
Outside London the general situation is rather gloomy. People
with skilled jobs in manufacturing or the public sector are the
lucky ones. As the City of London hollows out, the UK
government's tax revenues decline and it can't maintain
historical levels of state support. Schools, hospitals and local
infrastructure struggle to maintain services and standards. The
major post-2016 state-sponsored infrastructure projects are
reaching their conclusion and there's no certainty about future
projects to replace them. The government has drastically reduced
the number of visas available for international students and, as
university numbers decline, the once buoyant student housing asset
class continues to suffer. Foreign tourists do also venture outside
London and more and more Brits are taking their holidays at home so
the tourist and related sectors remains one bright spot.
Welcome to Britain in 2025. Will this be the reality?
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As the banking industry continues to be shaped by technological and regulatory forces, we’ve gathered our European Central Bank (ECB) experts to hold a conference about this changing landscape. KPMG’s ECB desk from Frankfurt will join our Luxembourg banking partners to unpack the latest news from the ECB, including regulations that will affect the future of banking.
We would be very pleased if you could attend this event, which will be held at our Luxembourg headquarters in Kirchberg on 30 March. The talk will begin at 5:00pm and last until 6:00pm, at which point the evening will be turned over to a networking session with drinks.
Please let us know if you are able to attend by using the registration button above (by 27 March, if possible).
We look forward to seeing you there!
Here in Luxembourg, LPEA are holding an event which will offer new initiatives by bringing General Partners (GPs) and Limited Partners (LPs) together to examine and speak on the industry from the “360” perspective, leaving no stone unturned. We are a sponsor of the event, as well as having a speaker present. David Capocci, Partner and Head of Alternative Investments will be offering his own insight on the industry nowadays.
Communications firm Attitude Consulting, released in January 2017, the results of a study developed among several Latin-American law firms with the purpose if determining the best countries in the region to invest.
This Q&A gives an overview of key recent developments affecting doing business in Turks and Caicos Islands as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities.
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