German financial sector ‘expects No Deal’ and wants no more concessions from EU
The German financial sector expects a No Deal Brexit and does not believe the European Union should make any further concessions to the UK to prevent one, a respected survey has found.
The mood among German bankers and financial service providers has hardened considerably, according to findings released on Monday by Frankfurt University’s Center for Financial Studies (CFS).
The study, carried out since Boris Johnson became Prime Minister, found that 86 per cent of senior executives in the German financial sector now expect No Deal.
But the findings will make troubling reading for anyone hoping that German business will put pressure on Angela Merkel’s government and the EU to back down in the face of Mr Johnson’s hardline approach.
An overwhelming 70 per cent of those polled said they believe the EU should not make any further concessions in order to prevent No Deal.
That is despite the finding that 61 per cent of those surveyed believe the financial markets have not yet effectively factored in the risk of No Deal and could suffer a considerable shock.
“Considering how likely a No Deal Brexit has become, the survey results are rather worrying, as there is little time left for market participants to make adjustments,” said Prof Volker Brühl of the Center for Financial Studies.
“The survey indicates that the financial industry is prepared to accept the potential drawbacks of a No Deal Brexit if it means finally obtaining clarity about future framework conditions.”
Despite their concerns, almost two-thirds of those surveyed said they believed the German financial sector was sufficiently prepared to cope with No Deal.
And 88 per cent said they believed a No Deal Brexit would lead to businesses and staff being relocated to continental Europe.
“Should there be a hard Brexit, which the majority of respondents assumes is the most likely scenario, it will be important for financial centres in continental Europe to demonstrate their efficiency,” said Hubertus Väth, managing director of Frankfurt Main Finance, an association of leading German bankers which funded the study.
“If we succeed in cooperating across borders, Europe could emerge from the crisis even stronger.”
The Center for Financial Studies is an independent, non-profit research institute affiliated to Frankfurt’s Goethe University.
The study was carried out alongside the institute’s quarterly CFS Index of German financial sector sentiment, and polled its regular panel of senior executives in the banking and financial services sector.