The head of the world’s biggest asset manager, BlackRock, has lashed out at the “irresponsible” British government as Brexit draws closer.
In an interview with CNBC Squawk Box, CEO Larry Fink confirmed that BlackRock was moving more of its operations out of London.
“We’re already now making bigger plans on moving different components of our business to the continent or to the United States.”
It’s a significant shift in tone from last year when Fink said “only very few roles” will be moved out of London.
It comes as prime minister Theresa May delays today’s crucial Brexit vote in Parliament.
Brexit Delay Will Crush UK Economy
Theresa May has delayed a scheduled parliamentary vote on Monday until March 17th, just two weeks before the Brexit deadline. Parliament rejected her first proposal in January by a record margin. If no agreement is reached next time, there’s a high chance the UK will crash out of Europe without a deal, harming the economy in the process.
The constant uncertainty has already had a profoundly negative effect on the British economy, specifically the British pound.
The British pound has taken a beating in the two years since the Brexit referendum, falling from $1.50 to almost $1.20 at its worst point. At the time of writing, £1 buys $1.30.
BlackRock CEO: Brexit is “Irresponsible”
BlackRock CEO Larry Fink confirmed that Britain’s “irresponsible” approach was costing businesses huge sums of money. He said Brexit is forcing his firm, and others, to abandon the UK:
“It’s a problem that’s quite frankly annoying every private sector organization in the world today because of the irresponsibility right now of the UK coming to a resolution. It’s putting more and more private organizations on alert.
Fink went on to explain how Brexit has cost BlackRock enormous sums of money. As a result, the firm is moving more of its operations out of London.
“We’re spending more money than we ever dreamed we needed to do to start working towards Brexit. Just because of the lack of understanding of its direction. It’s forcing all the private sector firms to be more prepared for Brexit and I do believe this is not a good outcome for the UK. We’re already now making bigger plans on moving different components of our business to the continent or to the United States.”
Not Just BlackRock
The BlackRock CEO said the bank will have a smaller future in the UK. And it’s not just his firm:
“It means probably a smaller future in the UK. And I’m not speaking about Blackrock. I’m hearing this from every organization.”
The Independent reports that at least 250 UK companies are in talks with Dutch authorities about moving to the Netherlands. Meanwhile, banks, including JP Morgan and Goldman Sachs, are shifting €800 billion in assets to Frankfurt in preparation for Brexit.
Last week, Honda announced the closure of its UK plant which will affect 3,500 jobs. Although the company insists it is not Brexit related.
Britain is about to see the biggest exodus of companies and capital in a generation. The consequences of which could be severe. The International Monetary Fund (IMF) says a no-deal Brexit could push the country into a recession.
Pray for the UK Economy?
Even the Church of England has weighed in on the upcoming Brexit deadline, urging parishes to pray for the poor.
It’s an unprecedented move for the church which is traditionally impartial on political matters. The Archbishop of Canterbury, however, appears to acknowledge the ongoing political disaster in the UK will have a severe effect on the economy.
“We cannot ignore the warnings that have been proffered about the possible profound impact that the next months may possibly have on the poorest of our society.”
He said the church must unite the country and support the vulnerable. Brexit is widely expected to hit the poor and ethnic minorities hardest.
“It is true that no predictions on the economy are certain. That is not project fear, it is saying that where there are risks it is the strongest, not the weakest, who must take the weight of the risk. That is not currently the way we are going.”
Last modified: September 23, 2020 12:27 PM