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EU referendum and Budget to dominate politics in 2016

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2016 is set to revolve around two big set-piece events for the world of politics.

Firstly, the Budget of 16 March will finally see the first conclusions presented from the FCA and the Treasury’s work on the Financial Advice Market Review.

Already dominating the thoughts of many experts last year, FAMR’s consultation ended on 22 December, with the project aiming to provide initial proposals ahead of Chancellor George Osborne’s arrival at the parliamentary dispatch box.

Osborne has also pledged to provide an update on the Government’s review into pension tax relief, while policymakers are also investigating the possibility of rationalising the existing pension guidance framework.

Hargreaves Lansdown head of retirement policy Tom McPhail says: “In one day we could see a fairly fundamental shift in how pensions are taxed, and much greater support for automation in providing advice.

“The latter might not actually make much difference for individual advisers, but at a business level it’s the sort of thing that could facilitate far greater customer engagement, particularly if it opens the doors for more information as distinct from advice.

“So the Budget is where we might start to see the big changes come.”

Hanover head of financial services Cameron Penny agrees: “FAMR and the outcomes from that, and the conclusions of the almost endless reviews of MAS and the guidance framework, could all be hugely important, and that’s all due in March.

“We are at a stage where everyone knows what the problems are, and there are a lot of ideas, but getting anything actually implemented has become the sticking point. Hopefully March will provide a point where some decisions are finally made on how to move forward.”

The second date is yet to be established, but pundits are increasingly certain Prime Minister David Cameron will push for a 2016 referendum on the UK’s membership of the EU.

The Conservatives promised a vote by the end of 2017, but have been widely predicted to target a trip to the polls this year. If the public vote to quit the EU, the repercussions for investments, regulation and the UK economy as a whole remain uncertain.

Cicero executive chairman Iain Anderson forecasts a September date for the referendum as “the most likely scenario”.

He says: “The trajectory that we understand at the moment is that there is going to be a summit in February which will be where EU leaders focus on the renegotiation.

“That means the renegotiation itself will probably need to be agreed by March, and at that point there will need to be something on the table.

“And that’s when we might start to see some of the Eurosceptics drop out of the Cabinet and out of the Government, and trigger a reshuffle.”

MRM head of public affairs Havard Hughes agrees, and argues the vote will expose divides between previously amiable Cabinet colleagues.

He says: “In many ways, the story of 2015 has been the divisions in the Labour party, but come 2016 the boot could be on the other foot when it comes to the EU referendum.”

While Lansons director Ralph Jackson agrees that both the Budget and the referendum will be important, he suggests broader areas of policy movement remain interesting.

He says: “Firstly, the approach to banking and the extent to which the further reforms follow the mould set by the Government’s action on implementing the Vickers ring-fencing proposals, which were watered down.

“Secondly, the focus on asset management with the FCA looking at business models. The outcome of that is very uncertain.

“And thirdly, the whole housing sector in terms of the potential for intervention in the buy-to-let market and the use of tax as an instrument to encourage certain types of behaviour.

“All of those areas could present huge challenges for advisers and intermediaries in 2016.”

Anderson adds that while the chances of opposition leader Jeremy Corbyn ever arriving as the new tenant of No10 Downing Street remain slim, the presence of the Islington North MP at the helm of Labour is nonetheless affecting the agenda for the current Government.

He says: “What it’s doing is it’s pushing the Chancellor to respond and he has responded with some quite consumerist approaches to policy which can be quite challenging for the sector.”

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Comments

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  1. Well then, let’s hope that people will be aware of the facts concerning Europe.
    Most of those advocating Brexit are pleased to hide the statistics. For example:

    1. Immigration. More than half of all immigrants came from outside the EU. So if you want to cut immigration in half you need not concentrate on EU members. When it comes to the vexed question of unemployment and benefits, EU immigrants have less unemployment than the UK born resident average and a whole lot less than immigrants from outside the EU. Indeed in 2015 there were 114,000 EU working age benefit claimants but 257,000 non-EU claimants. This was confirmed yet again in an article in the Economist on 12th December (page 25). So Dave need not pursue this line with the EU – he can just impose it on non-EU immigrants with no European repercussions.
    2. Cost. The net cost of our membership to the EU is 0.5% of GDP. That is not insignificant, but compare that to the 0.7% we just give away in foreign aid and it rather puts it in context.
    3. Red Tape. Yes this is irksome, but HMG has a penchant for Gold Plating and isn’t that backward in lumbering us with their own burdens. In fact compared to the rest of the EU our employment is the least regulated. As far as products are concerned only Holland has less regulation.
    4. I not going to write a full essay and much has been mentioned concerning trade and economics. But consider – what will happen with our input to Airbus if we leave? I do hope you don’t have clients working for BaE as they will probably relocate to the US if we leave Europe. The EU is our biggest trading partner – bar none. True London might not be that badly hit, but the regions likely to suffer most are the North East (think Nissan), Wales, N.Ireland and most north of the Watford Gap. In other words those areas least able to weather any setbacks. Just consider this: China has 195 of the World population and accounts for 13% of world exports. The EU has 7% of global population, but accounts for 32% of world exports.
    Do we really want to leave a club like this?

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