The City and the €

bobk75

Hi

I have no idea where to appropriately post this question so forgive me, I'm out of my depth here.

This started with a post about the EU :

"I am wondering if the City is unwinding all its contracts and business with EU banks and financial institutions in readiness for when the Euro collapses. Leaving other stakeholders to hold the risk. The City doesn't seem to be trying very hard to defend the losses it seems to be making or fighting for equivalence. This seems to be happening quietly and systematically. ”

It's the  last two sentences that rings bells. Is that happening?

Then -  firstly - is the collapse a possibility?

Second - if the prediction came true I'm a bit confused / worried as my pension income (UK taxed) is from the UK and I live in Europe (dual Nat.) with a sum of money ready to buy a property sitting in a Euro bank.

Am I at risk and if so what to do?

Your thoughts would be appreciated.

benbay001

Even as a dyed in the wool Brexiteer, i dont think the Euro is likely to collapse.
There will be more "events" like Greece and the migrant crisis but i think the EU (and Euro) is here to stay.
As for your income being in GBP and expenditure being in EUR, you would benefit from a collapse in EUR.
I wouldnt transfer savings out of the currency you use daily though.
All IMO obviously.

tacpot12

I don't think the Euro will collapse either. I think that the French and German governments will be prepared to make any changes necessary to ensure that that won't happen, even if those changes are politically difficult with their electorates.

I would agree that the City doesn't seem to be fighting effectively for equivalence, but as we are no longer part of the EU, it is not going to be possible to argue that the UK should have any special access to the EU, any more than the USA or Japan would have.  All of the big global banks and investment houses had operations in the EU, but while we were part of the EU it was easier to concentrate operations in London. Now that that isn't the case, all the EU finance work has moved to Paris or Berlin or Frankfurt, and nothing is going to bring it back. I'm confident that UK will remain a large, prosperous economy, but our financial services industry is only going to be able to service UK needs and not European needs, and we will lose valuable jobs as a result. 

maxsteam

bobk75 said:

This started with a post about the EU :

"I am wondering if the City is unwinding all its contracts and business with EU banks and financial institutions in readiness for when the Euro collapses.

I cannot find the post anywhere except here. If it was written by anyone of merit, it would say "if the Euro collapses" instead of "when". Presumably it was written by a know-it-all wannabe financial guru on Facebook or Twitter? It's safe to ignore it.

There will be swings in the value of currencies to which the media will tag words like crisis and collapse. In the year of the Euro Crises, the Euro lost less than 5% of its value against the pound. Personally, I would not have used the word crisis.

Thrugelmir

From the outset. For the Euro to work.  Those in the club need to have a level fiscal playing field. No signs that they yet do. 

[Deleted User]

How is the Euro currently unworkable, Thrugelmir? If Germany could reunite under a single currency at 1DM=1Ostmark, then you can pretty much bank on the Euro continuing to work as long as the political will is there. 

Thrugelmir

ZingPowZing said:

How is the Euro currently unworkable, 

Well documented.  Like most Brussels centric plans becomes a political fudge. 

[Deleted User]

Of course there is give and take between different countries - what do you think is happening across the UK?

Reaper

bobk75 said:

Hi

I have no idea where to appropriately post this question so forgive me, I'm out of my depth here.

This started with a post about the EU :

"I am wondering if the City is unwinding all its contracts and business with EU banks and financial institutions in readiness for when the Euro collapses. Leaving other stakeholders to hold the risk. The City doesn't seem to be trying very hard to defend the losses it seems to be making or fighting for equivalence. This seems to be happening quietly and systematically. ”

I fear it is because there is nothing the city can do. Boris went for brinkmanship on fishing rights and largely got his way, but it was nonsense.

Financial services generate 7% of the nation's GDP.

Fishing is 0.1%

But for political reasons only fishing got political will, with Boris in his usual fantasy land saying post Brexit the city "will adapt and prosper mightily" (30th December 2020). No indication how.

So what happened because he failed to negotiate equivalence? On day 1 of Brexit £5bn of share trading switched from the UK to EU banks. Now Amsterdam has now overtaken London as the continent's biggest share trading centre.

Whether you agree with Brexit or not ignoring the city and just hoping it will sort itself out somehow is utterly irresponsible. I don't think the government has appreciated yet how serious this is and how it will reduce their income too.

So forget the risk to the Euro, it's the UK you should be worried about.

Thrugelmir

Reaper said:

bobk75 said:

Hi

I have no idea where to appropriately post this question so forgive me, I'm out of my depth here.

This started with a post about the EU :

"I am wondering if the City is unwinding all its contracts and business with EU banks and financial institutions in readiness for when the Euro collapses. Leaving other stakeholders to hold the risk. The City doesn't seem to be trying very hard to defend the losses it seems to be making or fighting for equivalence. This seems to be happening quietly and systematically. ”

So what happened because he failed to negotiate equivalence? On day 1 of Brexit £5bn of share trading switched from the UK to EU banks. Now Amsterdam has now overtaken London as the continent's biggest share trading centre.

Perhaps the EU had to wish to do so.  There's two parties involved. 

[Deleted User]

But it was always the goal of Brexit to diverge from EU regulations; PM May was quite explicit about not wanting the City to align, at the outset of negotiations.

As consumers, I'd say be careful what you wish for. For example, a fund is bound to have no more than 10% total investment with unlisted companies. That's an EU regulation. Woodford got round it by listing companies on the Jersey stock exchange. Expect an uptick in shenanigans like this as the financial services industry unburdens itself from "stifling Brussels interference."