EU passporting rights: cheers to thatApr 07, 2017
Along with access cheap red wine, the UK will see several of its economic privileges coming up for negotiation over the next two years. One of these is EU passporting rights, which were established to enable firms to do business freely across European Economic Area (EEA).
Quite what these negotiations will mean for British businesses is yet to be determined, but that hasn’t stopped people preparing and forecasting for what’s to come. Labs’ Jesse Shemen recently attended a dinner event, sponsored by the Emerging Payments Association (EPA), to discuss EU passporting rights. We asked Jesse to rehash a few topics on EPA’s dinner menu.
How will the loss of passporting rights affect businesses in the UK?
It’s already having an impact. Start-ups and investors care most about three things: customers, talent, and capital — all of which will be affected by the Brexit talks. People are understandably thinking harder about London as a place to establish and grow a fledgling business. With that said, the market has been relatively stable since the referendum, easing the concerns of investors and founders alike.
Why is this of particular concern to the EPA?
Payments are, by nature, more likely to be affected by changes to border regulations, as FX, remittances, and other payment services all require regional regulatory approval. Moving away from a single governing body could create new challenges for the providers.
How can businesses prepare for the changes brought about by Brexit?
My advice is to carry on as normal, but make sure there are contingency plans in place just in case your funding, talent, or sales channels become compromised. Avoid rash decisions and be pragmatic. A fatalist attitude doesn’t help. I think it’s better to be cautiously optimistic, and try to make the best of whatever is thrown in your direction.
How did attendees at the dinner respond to the presentation?
A few people suggested that it would be helpful to have more capital support from government entities like the British Business Bank. There of course isn’t a sea of growth-stage capital in Europe as there is in the US, but the issue becomes more apparent if UK businesses don’t have access to the European Investment Bank, for example.
The EPA dinner focused largely on strategic jurisdictions in the EU for payment services and whether these changes could result in fintech firms looking to relocate. Could we really see any sizeable fintech exodus if UK firms lose EU passporting rights?
The potential impact is exaggerated. The breadth of London’s economy and workforce means it will continue to be among the top cities for start-ups. The robust financial markets won’t disappear overnight.Jesse didn’t recall the type of wine served at the dinner, but most likely it was European.