Brexit is currently built on shifting sands, with the UK's future relationship with the EU still far from defined let alone agreed. But it will inevitably have a wide-ranging impact on businesses, the financial sector and its employees.

Employers back UK-wide approach to immigration

How will immigration policies post Brexit affect the UK's employment? The latest quarterly Labour Market Outlook from the CIPD and The Adecco Group, based on a survey of 2,000 business owners, finds that employers would prefer a national approach to post-Brexit immigration, rather than a sectoral or regional policy:

• 41 per cent of employers support a national approach to tackling the UK’s skill and labour shortages post-Brexit, in comparison with those who back a regional policy (5 per cent) or sectoral one (13 per cent);
• firms employing EU workers are more likely to invest in training than employers that don’t employ EU nationals;
• demand for labour is likely to remain relatively strong in the near-term; and
• the median basic pay increase expected over the 12 months to December 2018 is 2 per cent.

VAT upfront will cause cash flow chaos

And Treasury Today reports this week on the cash flow problems that could arise if British companies have to pay VAT upfront on EU imports after Brexit, as was discussed by British MPs during a debate on a Brexit-related bill in parliament last month. British importers can currently avoid paying upfront VAT by registering with HMRC, so that VAT is paid by the end customer/consumer. The Independent quotes the British Retail Consortium, in a briefing sent to MPs: “If the bill becomes law without any commitment to inclusion within the EU VAT area, UK businesses will become liable to pay upfront import VAT on goods being imported from the EU-27 for the first time. Liability for upfront import VAT will create additional cashflow burdens for companies, as well as additional processing time at ports and border entry points attached to the customs process. Mitigation measures could include companies instituting a revolving credit facility, or utilising import VAT deferment reliefs.”

Boost for EU independent schools

And last but not least, research from Oliver Wyman suggests that, seeing as between 31,000 and 35,000 financial services jobs are predicted to be relocated from London to EU cities in the medium term, this will have implications for international school places in cities such Frankfurt, Paris, Amsterdam, Brussels and Dublin. The study said that as many as 53,000–60,000 children will need school places in the EU if the large job relocation goes ahead after Brexit: “Uncertainty about the outcome of Brexit negotiations means the number of job relocations cannot be known. However it is clear that should incumbents in these roles follow them to the EU, a significant opportunity for companies catering to their needs will arise.”

And it adds: “Even with the final relocation totals still to be determined, it is clear that there will be substantial shortages of school places in some cities if a ‘hard Brexit’ comes to pass and relocations occur quickly. Presently, Frankfurt is facing the most pronounced potential shortfall in such a situation. However, any city that becomes home to Euro clearing or similar operations will also face a significant shortfall.”