The Brexit vote
It is already almost two years ago, when the UK voted in favour of the Brexit, the morning of 24 June 2016, all European Union citizens have wondered: “Is this the end of the EU?” All international businesses have feared: “Is this the end of the free circulation of goods and labour?” The entire financial sector has asked itself: “Is this the end of the free circulation of capital and services?”
The Brexit process key dates:
So what now?
After a short period of time of denial followed by anger, everybody understood that a long and winding road of bargaining i.e., of politics and tactics, would lie ahead of us. With not even all the consequences of the Brexit clearly known, businesses, in the UK but also outside of the UK, have to take important decisions on their future.
Smiffys, the costume and fancy dress supplier, chose the Netherlands, Odgers Berndtson, the international headhunting firm, and Barclays bank chose Ireland, Diageo, the drinks giant, chose Italy, and Goldman Sachs, UBS and Standard Chartered chose to move staff to Frankfurt. The insurer Lloyd’s chose Belgium. A lot of UK banks are still hesitating between Paris and Frankfurt as credible relocation options.
And what about Luxembourg? Insurance giant AIG as well as the insurer Hiscox, the private equity firm Blackstone and the asset manager M&G Investments are amongst those who have already opted for Luxembourg.
In the European capitals’ competition, Luxembourg has surely a lot to offer.
Pierre Reuter, Investment fund partner (Hogan Lovells (Luxembourg) LLP)
We also see that Luxembourg law is more and more often used to govern international transactions, in particular if EU agencies are involved.
Brexit could be seen as an opportunity particularly for Luxembourg with its strong financial sector.
Luxembourg being the biggest investment funds centre in Europe, many relevant companies already have an office in Luxembourg, and as passporting is a key topic for banks, investment funds and insurers, the trend will be all the stronger.
On the contrary, as Luxembourg main export product/service is financial services, it would be less impacted by a potential tax for exporting products, goods and services to the UK.
Luxembourg assets
In the competition between European capitals, Luxembourg has surely a lot to offer:
What we know for sure?
In fact, not very much as the Brexit negotiations are ongoing and every day seems to bring new developments.
However, a free trade agreement (FTA) could be a solution to create the framework between the UK and the EU. The International Regulatory Strategy Group (IRSG), representing the UK’s financial and professional services sector, has published a Brexit blueprint (in collaboration with Hogan Lovells) and the FTA is a key proposition of the report.
Both sides will hopefully manage to find a collaborative framework.
What can we do to help?
As the tight links between the UK and the continent as well as between UK and European business will most likely remain post-Brexit, we think (and strongly hope) that both sides will manage to find a framework that will permit and, maybe, even foster this collaboration.
Hogan Lovells has gathered specialists and pulled resources from all key practice areas to get you practical answers to the questions that you have in relation to Brexit.
Pierre Reuter is heading both our Investment Funds practice and our Luxembourg Regulatory team.
Should you wish to go further, please:
- Visit our Brexit blog,
- Visit our Luxembourg blog,
- Follow us on Twitter and LinkedIn.