Jon Vollemaere CEO, R5FX
Jon Vollemaere CEO, R5FX

AFME’s 11th Annual European Fixed Income and FX Market Liquidity Conference

Thursday 25 February 2016 St. Paul’s, London
In a hospital pass during the panel about China I was asked what I thought about BREXIT? (At time of writing the decision had not come through) I said that as a New Zealander I was perhaps not qualified to answer that question on behalf of the British people but seeing as Immigration had, at the time become one of the main issues then perhaps I was fully qualified to answer that question.

First Published: e-Forex Magazine 72 / Recent Events / July 2016

What had struck me earlier in the day was the speech given by Charles Roxburgh, Director General, Financial Services, HM Treasury who described how the Treasury at the calling of a general election has to put together an entire economic dossier and 4 year plan for both main parties – as the civil service needs to be fully prepared for whoever should emerge as the victor of a general election. So two, often completely different economic plans are drawn up.

Imagine the frustration knowing that every time one of them is a complete waste of time. Why is this relevant? Because the very same is true of BREXIT. An entire plan has already been drawn up for exit should it happen or not, and vice versa. Should it not go ahead – it will likely not be business as usual.

The intriguing element to it all is what the Chinese might think of BREXIT?

Brexit would be undesirable for many Chinese
Brexit would be undesirable for many Chinese

On one hand it would allow the UK to freely enter into trade deals with both China (and India) without seeking the agreement or approval of the EU. On the other hand the UK would almost immediately lose its negotiation power at the Chinese table as the UK would now need a trade deal with China far more than it does today. China, like the USA would lose a convenient way to bring products via the UK into the Union. Something which appears to have upset Obama. And he, in turn, has upset every voter for Exit.

Brexit would be undesirable for many Chinese because it risks disrupting and weakening that unified market by removing one of the main players in finance, services and high tech. It will mean that Chinese investors and business people who have often viewed the English speaking UK as a stepping stone into the greater European market will have to start looking elsewhere.

As for myself – personally I don’t think it’s a good idea. Brexit and President Trump could drive cable below 1.36 so who knows?