Authorities anti-business bias hurts UK financial system: London chief monetary officer

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LONDON (Reuters) – The UK government’s anti-business stance is hurting the economy and companies will move abroad if they continue to be attacked unfairly to warn of the dangers of Brexit, the City of London chief of policy told Reuters.

FILE PHOTO: Catherine McGuinness, Chair of the Policy and Resources Committee of the City of London Corporation, poses for a picture in London, Great Britain, Jan. 17, 2018. Picture dated Jan. 17, 2018. REUTERS / Hannah McKay

The government’s already strained relationship with business deteriorated further over the weekend after a senior minister accused companies of “totally inappropriately” threatening to withdraw from the country over Brexit.

The day before, Foreign Secretary Boris Johnson was quoted by the Daily Telegraph as saying that he denied business leaders’ concerns about the impact of Brexit and used swear words at a meeting with European Union diplomats.

Catherine McGuinness, the political leader of the City of London, the local government that runs Europe’s largest financial center, said the government’s relationship with the economy has been the worst since starting work in 1983.

She said business-politician relationships were even worse than when taxpayers were forced to spend more than £ 133 billion ($ 176.65 billion) bailing out UK banks at the height of the 2007-2009 global financial crisis.

“Some of the statements we have heard do not encourage you to believe that we are an economy that welcomes business,” McGuinness told Reuters at a restaurant near the Bank of England.

“The business is very frustrated that we are not making any progress. Second, there is great uncertainty, and thirdly, if they try to say something they do cautiously, they become dejected. “

The acidification of relations comes at a critical point in the Brexit process when many large corporations are deciding what operations they may need to relocate to the continent to ensure they can continue trading with the EU.

A number of companies with major activities in the UK, including Airbus, Siemens and BMW, have raised concerns about the impact of the UK’s exit from the EU, saying that leaving the EU without a deal would force them to reconsider their investments.

With only nine months to go before Britain’s exit from the EU, little is clear about how trade will flow between the world’s fifth largest economy and its largest trading bloc.

Economy Secretary Greg Clark tried to distance himself from some of his peers on Monday by saying that every company and industry that brings jobs to the UK has a right to be heard.

McGuinness said she was concerned that the time for an agreement is running out and the likelihood of the UK leaving the EU without a divorce settlement increasing.

“You get the feeling that the sand is running out of the hourglass pretty quickly,” she says. “I have a feeling that a lot of cans have been kicked in the street and we hit the wall.”

McGuinness also said she was concerned that the government will end up staging a trade deal for goods only, with no proper addressing of services.

This would help solve the thorny question of how to avoid a hard border on the island of Ireland that could rekindle sectarian violence in the region but leave financial and other services out in the rain, despite being around 80 percent the UK economy make up activity.

“I worry that there is a possibility that they will put other parts of the economy above the big engine that financial and related professional services are,” she said.

McGuinness, who traveled to China and the United States last year and will soon be visiting India, said Brexit undermined Britain’s reputation as a predictable business location and forced the country to prove its worth to businesses in ways that it did hat ‘don’t have to do beforehand.

“You saw the UK as the gateway to Europe and the pinnacle of success … I think we don’t look very stable anymore,” said McGuinness.