A clear majority of investment professionals in the European Union outside the UK believe investment returns in the UK will suffer because of Brexit, according to CFA Institute research.
The CFA’s latest Brexit barometer found 90% of its members in the EU ex-UK believe the UK’s investment returns will be negatively affected by its departure from the EU.
This figure dropped to 80% when the institute’s worldwide members were asked and to 46% among its UK members.
It also found two thirds (67%) of UK respondents believe their employers will reduce their domestic presence because of Brexit and a further 64% think it will negatively affect their firm’s ability to hire the best talent.
However, there was some optimism among UK investment professionals compared to previous surveys, as this year 68% believe Brexit has caused a deterioration in competitiveness of their home market, compared with 70% in 2017 and 74% in 2016.
Trade deal
Elsewhere, the survey found a degree of confidence among investment professionals that Brexit negotiations will end with a trade deal.
Globally, almost half (49%) expect negotiations to result in either a comprehensive trade deal covering both goods and services (25%), or a goods-only deal (24%).
Respondents outside of the EU were more optimistic, led by China, where 52% anticipate a comprehensive trade deal will be agreed.
In the UK however, only 17% of respondents expect Brexit negotiations to deliver a comprehensive trade deal, with most (23%) expecting a goods-only agreement.
For respondents in Switzerland and Germany, the most likely outcome is a UK ‘crash-out’ exit, with 35% and 30% believing this, respectively.
Will Goodhart, chief executive of the CFA Society UK, said: “The emotional temperature as revealed in the latest CFA Institute Brexit survey is falling, but the most recent findings show considerable concern for the UK’s competitiveness as a financial centre.
“In light of the uncertainty over how the Brexit trade deal negotiations will play out, an increasing number of survey respondents in firms with a strong UK presence expect to see that presence reduce.”
The CFA quizzed 974 investment professionals including 233 from the UK, 238 from other EU countries and 503 from the rest of the world.
Short transition
The survey was conducted in February before Monday’s initial agreement between the UK and the EU on a period of transition from 29 March 2019 – the date the UK is set to officially leave the EU – until 31 December 2020, reducing the chance of a cliff-edge or no deal scenario at the end of March next year.
The Personal Investment Management and Financial Advice Association (Pimfa) welcomed the first joint draft agreement, but raised concern over the short duration of the proposed transition period.
John Barrass, EU expert and deputy chief executive at Pimfa, said: “This may allow insufficient time to negotiate the final UK/EU Comprehensive Agreement which will govern our future relationship after transition.
“Pimfa has made clear its preference for a flexible transition end determined by the completion and coming into force of the Comprehensive Agreement, so that firms know ahead of time what they will need to change towards and can plan appropriately.
“We welcome reports suggesting that an explicit clause allowing for a limited extension for this purpose could be included in the final text.”
