Impact of Brexit on Financial Firms

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Financial Firms

On December 11th, parliament will make a decision on whether or not to accept Britain’s withdrawal agreement with the European Union. What are the ramifications for businesses, most specifically financial firms? From a PESTEL analysis perspective, it is important to note that financial firms ought to not only assess, but also analyze the relevant macro-environmental factors likely to impact the way they do business. Four factors will be taken into consideration in this discussion, with the context being the article; Financial Firms have Quietly Prepared for Brexit. There said factors are political, social, economic, and legal factors.

Political

This has got to do with the degree (and impact) of government intervention in the economy. In reference to Brexit, the Dec 11 parliamentary decision will impact financial firms and how they conduct business. Although an event of this nature ought to trigger uncertainty in the industry, the article argues that financial firms have been quietly preparing for Brexit. This has been made easy by three key factors that give the said firms an added advantage over other kinds of business, i.e. size, regulation, and fear.
However, regulatory pressures are sure to be witnessed. For instance, as it has been pointed out in the article, “the  ECB (European Central Bank) is insisting that banks set up more than mere “empty shells”, in which business is booked with EU27 clients while the real business—and risk—stays in London, outside its purview.”

Economic

This is an amalgamation of all the factors that affect the profitability of firms and their viability in the long-term. The profitability of financial firms, particularly banks, is likely to experience a roller coaster of sorts going forward. This is particularly the case if the uncertainty over the future of the country’s economy persists and BOE is forced to revise interest rates downwards from the current 0.75%.

Social

This has got to do with the population’s attitudes, characteristics, and shared beliefs. Two of the social aspects that ought to be highlighted in this case are migration and access to higher education. With regard to immigration,….....

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References

The Economist (2018). Financial Firms have Quietly Prepared for Brexit: The Benefits of Scale, Regulation and Fear. Retrieved from https://www.economist.com/finance-and-economics/2018/12/01/financial-firms-have-quietly-prepared-for-brexit

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"Impact Of Brexit On Financial Firms" (2018, December 09) Retrieved March 28, 2024, from
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"Impact Of Brexit On Financial Firms", 09 December 2018, Accessed.28 March. 2024,
https://www.aceyourpaper.com/essays/impact-brexit-on-financial-firms-essay