The judges voted 8 – 3 on Tuesday that prime minister Theresa May must put the issue to MPs.
With all the concern over the possibility, or even probability according to some, that London-based financial services firms will lose access to the ‘passporting’ of services throughout the bloc, any signs the government may have to rethink its ‘clean Brexit’ would certainly cheer most in the industry.
This does not appear to be the case however, with comments emanating from wealth managers and asset managers indicating that a grudging acceptance of the inevitability of clean Brexit has taken hold in the industry.
The decision is expected to result in a marginal delay to the triggering, if any delay at all, as there is reported to be very little appetite among MPs for voting against the government to block the implementation of the referendum verdict, even in the Labour ranks.
As a result, investment industry firms commenting on the ruling appear not to be making any significant adjustments to their outlooks in response, or even attempting to talk up the feasibility of blocking an exit.
Given all this, the energy of UK based firms has been shifted to planning for life without the European single market rather than weighing up the probability of such a scenario.
Geoffrey Yu, head of the UK Investment Office at UBS Wealth Management is among those who are looking at contingencies now, rather than banking on any delay or abandonment of Brexit.
“Though there will be some cheer among those with lingering hopes for a delayed Brexit, today’s decision represents a marginal delay, at most,” he said. “The immediate relief will be short-lived. “With the bulk of the market and British households now resigned to the reality of leaving the EU, many business will be making their Brexit contingency plans regardless of the delay.”
“A prolonged sense of uncertainty does not mean Brexit will not happen, and we expect that Article 50 will be triggered in March regardless,” Yu continued. “Sterling investors will be sending their thanks to the Supreme Court today. The added complication in the Brexit timeline should see the pound gain further ground against the dollar.”
“As expected, the Supreme Court ruled that the UK Parliament has to go through a formal process to allow the government to send an Article 50 letter,” a Charles Stanley spokesperson commented. “This is unlikely to delay the government’s timetable to send such a letter by the end of March, which allowed for such a verdict. The commons has already voted on this matter when it voted 461 to 89 in favour of beginning the exit process. The Supreme Court did not uphold the idea that the devolved Parliaments and Assemblies have any veto on this, as it is a Union matter to be handled by the UK Parliament itself. This was an important part of the decision which helps the government. This should not have much effect on share prices, as the government’s timetable was well known in advance.”
From an asset management point of view Mike Zelouf, head of Europe, Middle East and Africa at Legg Mason affiliate Western Asset Management painted a similar picture.
