The chairman of Lloyd’s has raised the prospect of a Jeremy Corbyn premiership as the Conservatives continue to falter over Brexit, but warned that regulatory pressures over the UK’s divorce from the EU are posing the biggest headache for the London market.
Bruce Carnegie-Brown said failed attempts by Theresa May to strike a Brexit deal, as well as infighting among Conservative Party members – who will be “split” on the Brexit issue “long after” it is resolved – was setting up the scene for a Labour rebound.
“The country will blame the Conservatives for having held the referendum in the first place and then blame them for the outcome, and so I think it feeds straight into Jeremy Corbyn’s hands, and all he has to do is sit on the sidelines,” the chairman said at the Milken Institute summit in London.
Whether or not a Corbyn premiership was a “threat” to Britain, he said, “depends on your politics”.
“But it’s certainly a very real outcome of these negotiations,” the Lloyd’s boss said.
However, Mr Carnegie-Brown, who took the helm at the insurance market this summer, warned that regulation was a larger concern.
“We will be forced by our regulators to be planning and implementing hard Brexit long before we have any comfort about transition arrangements.
“In that respect, the regulation of our markets is a bigger threat to London than Jeremy Corbyn, or Brexit, in my view.”
The chairman of Lloyd’s of London says regulation is a bigger threat than Labour leader Jeremy Corbyn (PA)
His comments come in the wake of a report from Morgan Stanley’s European equity team, which made headlines after warning investors of the “perceived risks of an incoming Labour administration”.
It said a Labour Government could result in a “radical change” in UK policy, making domestic policy a “bigger risk than Brexit”.
Many financial services firms have been calling for a transition period that would allow them to continue accessing the EU market beyond March 2019 and better prepare for a new relationship between the UK and the bloc.
But the clock is already ticking on a deal, as many insurance contracts already in force will have claims beyond 2019, and insurers are waiting for guidance on how to handle existing cross-border contracts after the Brexit date.
“Insurance business that gets written on the 1st of April 2018 will still be enforced on the 1st of April 2019, post-Brexit. So the issue of transition is already far too late in terms of contingency planning,” Mr Carnegie-Brown said.
Lloyd’s of London announced earlier this year that it would set up an EU base in Brussels in a bid to secure its European business after Brexit.
Mr Carnegie-Brown assured that the company was “open minded” when it embarked on its search, but settled on Belgium after determining that it had a “robust regulator” that was “neither too hot nor too cold” and had convenient transport links to London.
“Most importantly for us is that Lloyd’s is a marketplace and therefore a rather unusual animal in terms of its structure, and we needed a regulator which was ready to invest time in understanding our model… and Belgium invested more time than any of the other European cities.”
However, the chairman said that Parisians were “very noisy” about why their city was not chosen, despite the fact that the insurance market made a decision before President Emmanuel Macron introduced a raft of reforms.
“They’ve only just moved into a position where they have a more business-friendly environment, and certainly by the time we were making our choices, that did not exist,” he explained.
“I think most people might want Paris to demonstrate its business friendliness over a more sustained period of time.”