The three-centuries‑old Lloyd’s of London insurance market has just delivered a 22 per cent rise in half-year pre-tax profits to £1.46 billion, as it continues extend its footprint in fast-growth markets worldwide.
The organisation has applied for onshore reinsurance licences in India and Malaysia, and opened a new office in Colombia, adding to the growth it is seeing in the likes of Dubai and China.
But a problem continues to loom closer to home. Lloyd’s admits trading in the European Union post-Brexit remains a “major issue” for the market, the EU accounting for 11 per cent of its premiums. The British financial services industry is concerned at the possible loss of passporting rights allowing it to do business in the EU after Brexit.
Lloyd’s chairman John Nelson has said already that the preferred option would be for Britain to retain access to the single market. However, this increasingly looks a pipedream as the 27 other EU members play hardball on Britain not getting single market access without accepting migrant freedom of movement across borders.
As the whole point of the Brexit campaign was largely to stop untrammelled immigration from the EU to the UK that seems a chimera not worth chasing. For Lloyd’s and other leading UK financial services players, therefore, the strategic answer seems – sooner or later – to be to move part of their operations across the Channel.
Chilly wind from the BoE
I wrote here yesterday about the challenges still facing the British economy despite a flurry of decent economic data over the summer, and some positive commentary from the likes of the OECD think-tank and the Office for National Statistics.
There was further good news from manufacturing yesterday, but the Bank of England financial policy committee (FPC), responsible for managing systemic risk and promoting economic growth, weighed in to warn against any complacency.
The FPC’s language was uncompromising, talking of the “challenging” outlook for financial stability in the UK as the nation faces “uncertainty and adjustment” following the Brexit vote. You pays your money and takes your choice.