Controversy abounds in the world of politics nowadays. Not only are our leaders still in the process of negotiating their way through the early days of a minority government – an arrangement that has historically proven considerably shaky – but upon their shoulders also lies the responsibility of negotiating a beneficial deal for the country as it leaves the European Union. Article 50 has now been invoked, and it seems there is no turning back.
So what might this mean for the UK financial sector, particularly in terms of the insurance industry? There has been much talk of the single market, and many movements have already been made in an attempt to ensure that the UK retains access to this vital trading arrangement. However, as things currently stand, it appears a “hard Brexit” is on the cards – meaning that it is currently predicted that we will exit the single market and customs union by the spring of 2019.
The trade that is undertaken via the single market includes the free movement of the so-called “four freedoms”: goods, capital, services and labour. Should the UK exit the single market as expected, then the financial sector will inevitably suffer severe restrictions. The cessation of the free movement of capital and services in particular will prove a hefty blow to our insurance industry as a whole, impacting landlord insurance, private medical insurance, commercial insurance and numerous other divisions.
It may mean that insurance companies currently undertaking business within the EU will incur untold additional expenses – possibly having to open individual EU branches in order to underwrite business within the countries and regions they have, until now, been free to access. Cross-border arrangements will likely be heavily restricted or nullified, and those UK-based insurance companies that have found themselves managing more lucrative agreements within the EU than outside of it may decide to relocate.
Furthermore, in leaving the EU, direct connections that have, to date, allowed the UK to trade easily with large first world bodies such as China and the US will likely incur numerous legal hurdles and an untold amount of red tape, increasing the likelihood that our larger partners may eventually decide to do business elsewhere. The fluidity of training and hiring opportunities is also likely to reduce dramatically, with UK businesses only able to access a very restricted pool of talent, and fewer opportunities becoming available to UK-based specialists.
Some, however, argue that exiting the Eurozone will free the country from the debt crisis that has proven a threatening shadow over the entire union since the end of 2009, allowing the UK to be more financially stable and answerable only to itself, without the obligation to support the economies of less financially stable EU countries. This way, the UK will be more financially stable as a whole, it is suggested. However, concerns remain that this may be too little consolation for a sector that thrives on international connections and partnerships.
For further information regarding your insurance and how it may be affected by the current political climate, contact Rigby Financial today on 01744886077.