FINANCIAL services in Scotland are in danger because of the possibility of a no-deal Brexit and uncertainty about what the sector will look like after the UK leaves the EU next year.
Bruce Cartwright, chief executive of the Institute of Chartered Accountants in Scotland (ICAS), told the Sunday National that a no-deal Brexit would be “extremely problematic”. “It’s not in the interests of any of the parties to end up there, so we have to believe that pragmatism will win the day.”
ICAS is the professional body for more than 20,000 accountancy professionals working in Scotland, the UK and globally, with members in more than 100 countries.
Cartwright said all the UK’s accountancy bodies had written collectively to the UK Government earlier this month after the publication of a technical note from the Department for Exiting the EU. The note warns that under a no-deal Brexit there would be no mutual recognition of professional qualifications, and that auditing rules would need to be altered.
He said: “We’ve written to the UK Government along with the other UK member organisations to stress that time is short on some really important issues.
“Firstly, accountancy and auditing are vital to the public interest of the UK – and the EU – given the role of financial information for the stability of markets. Even if there is an orderly withdrawal then there could be short or medium term economic upheaval.
“So, what we are calling for is much more clarity about the terms of a Brexit deal and any transition period.
“Secondly we need certainty that accountancy and audit qualifications have been or will be part of negotiations so that they will continue to be recognised in the EU after Brexit.
“And thirdly, so that businesses don’t risk having to have more than one audit report, there should be co-operation on audit regulation between the UK and the EU, as there is at the moment.
The joint letter, sent on October 12, says: “With time rapidly running out in the negotiations, we urge the UK Government and the EU27 to avoid a disorderly ‘no deal’ scenario and to deliver on the above priorities in order to minimise the potential repercussions for businesses, markets as well as governments and, ultimately, individuals.”
Financial services, including accountancy, generate around
£8 billion for the Scottish economy and employ almost 100,000 people directly, with a further 100,000 employed indirectly.
The latest quarterly report from Ernst & Young, known as EY, shows that since the European Referendum in 2016, 35% of UK financial services companies have said they are considering or have confirmed relocating operations and staff to Europe.
The EY Financial Services Brexit Tracker shows that with less than six months to go until the UK exits the EU financial services firms are “increasingly putting their contingency plans into action” in a bid to ensure business continuity and minimise the potential disruption for clients, especially in the event of a no-deal Brexit.
Omar Ali, UK financial services leader at EY, said “Firms aren’t merely talking about their plans,” he said. “Across Europe, the wheels are in motion on relocation and hiring strategies as firms make their ability to serve clients from day one of Brexit their number one priority.”
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