Brexit no-deal to hit UK asset managers hard

Brexit no-deal to hit UK asset managers hard

The Investment Association (IA) has warned the growth of European investment in UK asset management underlines the importance of a Brexit deal being reached.

The trade body has revealed the hit fund houses would take if a deal isn't struck after Michel Barnier, the European Union's chief Brexit negotiator, has said there could be an agreement on the terms of the UK's exit by early November if both sides were "realistic".

The UKs increasing status in global asset management has seen assets under management (AUM) from overseas clients increase by almost a fifth to £3.1trn, according to figures published by IA.

Article continues after advert

More than half of overseas assets were from European investors, an increase of nearly 30 per cent from 2016.

The UK leads Germany, France and Switzerland in asset management, according to the Investment Association, managing 35 per cent of AUM.

Chris Cummings, chief executive of the Investment Association, said: "The clear value the European market brings to the UK asset management industry underlines the urgent need for a Brexit deal to be completed by March 2019 which protects our industry, and more importantly, the savings of millions of people right across Europe."

The IA also published its latest figures on the size of the UK asset management industry, which showed £7.7trn was managed by its members in 2017, an 11 per cent increase on the previous year.

It also highlighted that the asset magement industry supported 100,000 jobs across the UK.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the finance sector was an area that could be "heavily impacted" by the outcome of Brexit.

But he said: "Nobody knows where Brexit will ultimately end up, but whatever the destination, life will go on for UK businesses.

"Asset managers and other sectors may find they need to make adjustments in order to continue their current lines of business, which may come at a cost depending on the precise deal negotiated, however the likelihood is they will be able to find a way to continue their operations."