London: The veteran private equity boss Guy Hands has said that Brexit has not only damaged the UK’s financial services industries but shattered the peace of Europe.
In a hard-hitting op-ed, Hands says that: “The UK’s position as Europe’s leading financial services hub is at risk and the balance of peace and democracy in Europe has been shattered. My view is that Brexit is largely to blame for both.”
In the article, Hands says that he predicted as far back as 2014 that if the UK left the EU “there would be a war in Europe by 2025”.
“Regrettably, the tragic events in Ukraine have been unfolding for a year now. Hopefully my prediction of a nuclear war by 2030 will not come to pass but it must have at least a 20% probability.”
In the article, Hands reveals that leaving the UK for Guernsey in 2009 was a “big mistake”, but says he felt he had little other option after being “aggressively targeted” by the UK tax authorities alongside an un-named hedge fund.
“On principle, I felt that I could not remain in the UK while the Inland Revenue was taking what my advisors and I felt was an absurd position in relation to the UK private equity and hedge fund industry,” he writes.
“The hedge fund that was targeted clearly felt the same as it also moved offshore. The Inland Revenue ultimately dropped its position two years later so either the absurdity of its approach must have become obvious to them or it must have realised that it risked losing the entire industry.”
Following the run-in, the Inland Revenue moved to a system of tax transparency for hedge funds and private equity which, Hands claims, is “no different to low-tax jurisdictions such as Guernsey, where I now live”.
“In hindsight, it would have been far better for me and my business if I had stayed….it was a big mistake from a business perspective for me to leave the UK.”
On the impact of Brexit on the City, Hands writes that the UK’s departure from the world’s largest trading block “threatens the advantages that the UK has historically offered” with the City’s eco-system of financial, legal and business professionals taking a major hit.
“I worry that with Brexit, ambitious individuals and employers will turn to other European cities such as Paris or Amsterdam, which offer free movement and uncomplicated access to the European open market,” he says.
Hands adds that Brexit contributed to London losing its crown as the largest European stock market to Paris at the end of last year.
“It is now better to have a European holding company rather than a UK one, and I believe it will soon be essential,” he says. “I, like many UK hedge funds and private equity funds, am considering where in Europe one should base oneself, which I find an extremely sad but an inevitable result of Brexit.”
Hands adds that, without the UK putting forward its generally pro-market views, the EU is moving away from the policy positions of other countries in north-west Europe and towards the more interventionist positions of France and southern EU states.
It is not the first time that Hands has weighed into the Brexit debate. Last year Hands hit the headlines after saying that the UK economy was “frankly doomed” because of Brexit and was heading for an IMF bailout.
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