Brexit damage is done - Comment & Profiles -

Jobs and assets that move out of the UK due to Brexit are not coming back. But banks can learn management lessons from the prime minister’s mistakes, writes Brian Caplen.

With the UK parliament likely to vote against prime minister’s Theresa May’s deal later today, Brexit uncertainty is set to continue. But even if the deal were to be passed the damage done by more than two years of political chaos will not easily be reversed.

International banks could not wait until March 29 – the date of the UK’s putative departure from the EU – to make plans for all eventualities, including falling out without a deal.

According to the consultant EY, 27 out of the 48 universal investment banks and brokerages it tracks – or 56% – are considering or have confirmed relocation from London to other EU financial centres since the referendum in June 2016. Since then 2000 new hires have been made in those centres (chiefly Frankfurt, Paris, Dublin and Luxembourg) with a projection that 7000 jobs could relocate overall. In asset terms, £800bn-worth ($1.02trn) is being transferred.

This business is not returning even if a miracle occurs and the British political classes suddenly agree to a common Brexit strategy. The time and costs involved in moving offices means that banks will stick with their new arrangements.

How did Theresa May get things to a situation whereby both remainers and leavers are united against her compromise deal? The management lesson is that being determined on a strategy is an insufficient condition for its successful execution.

Many have praised the prime minister’s resilience in the face of a barrage of hostile criticism and opposition. But this strength has also proved to be a weakness in that she failed to build a consensus for the deal either within her own party or, critically at a time of national crisis, across the political spectrum. She has also been blind to the need to retreat and change course when a strategy is not working.

Building a consensus in an organisation is tedious and time consuming, especially when CEOs believe – as they are bound to – that their chosen strategy is the correct one. 
But as the Brexit crisis shows, if you don’t take people with you defeat is the likely outcome.

Every bank CEO can learn some lessons from the UK's Brexit troubles even if their business is unaffected by it.

Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen

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