Tuesday, January 08, 2019

British companies are worried about Brexit, not Jeremy Corbyn

I was ill-advised enough to talk to my English father-in-law over Christmas about Brexit. He is one of the only people I know who unashamedly voted to leave the EU and, despite being an intelligent and clued-in individual, he still seems to think that this is a good idea. (Polls suggest that a re-vote would result in a comfortable Remain victory, whatever that might mean for the situation in practice.)
One particular claim he made gave me pause for thought, though. When I said that companies were already pulling out of the UK in droves, even before the divorce becomes official, he countered that "studies show" that those that are exiting the country are doing so because they are worried at the prospect of a Jeremy Corbyn labour government, not because of a little thing like Brexit. This struck me as eminently unlikely, but, as I had no evidence to the contrary, there was little I could say.
After a bit of research, it seems that the study (singular, not plural) my father-in-law was referring to was reported recently in The Spectator, a right-leaning British magazine, and refers to a specific study of high net worth clients (i.e. individuals, not companies) by British wealth management company Saunderson House. The survey of these rich guys asked what worried them most. Actually, the survey showed that they were most worried about losing their jobs, but a "change in government" (note, no specific mention of Jeremy Corbyn) was second, and "global instability" (the closest the survey came to talking about Brexit) was third. The article also mentions a couple of other British wealth managers who claim, on a purely anecdotal level, that many investors are taking their money out of Britain because they are worried that Corbyn might come to power in the chaos swirling around, well, Brexit... In this context, what they are actually talking about is the threat of a wealth tax that a change in government might bring.
So, this is not quite the science-based evidence that my (rich, white, and slightly racist) father-in-law purported it to be. In fact, it is nothing to with company movement at all, does not mention either Brexit or Jeremy Corbyn, and is certainly not definitive even in what it does claim.
In fact, the evidence seems clear that many companies, particularly in the hugely-important finance field, are in fact pulling out of the UK in favour of new European operations, and banks and other finance companies have moved at least $1 trillion out of Britain and set up new European offices in recent months, specifically due to the uncertainty of Brexit. This represents about 10% of the total assets of the UK banking sector, and is probably a conservative estimate as it only includes those companies which have made public announcements about their moves.
I rest my case.

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