See below for a roundup of recent Brexit news and market updates based on our conversations with clients. Please let us know if you'd like to speak about any of this in further detail.

Please see here for our Firm’s comprehensive Brexit coverage.

Key Developments

  • Race for Conservative Party Leader narrowed to Theresa May and Andrea Leadsom
  • UK property fund managers close gates to stem redemptions
  • French government announces details regarding plan to compete for UK business

Political and Economic Developments


  • The next UK Prime Minister will likely be either Theresa May or Andrea Leadsom, following a vote by Conservative Party MPs Thursday (May remains the favorite, securing more than twice the number of votes as Leadsom). The candidates will now go forward to a ballot of the members of the party. The winner is expected to be announced on September 9th, although some Conservative MPs are asking for the process to be accelerated.
  • A motion rejecting the use of EU nationals living in the UK as “bargaining chips” in negotiations on the UK’s exit and calling on the Government to urgently commit to giving such people the right to remain in the UK was passed earlier this week in Parliament. Many see the vote as a way for the Labour Party to put pressure on the Conservative Party leadership candidates to guarantee the rights of EU migrants in the UK.
  • On Thursday, three more UK property fund managers stopped investors from removing money from their UK property funds, joining other funds that have taken similar actions in recent days. This “gating” of property funds is in response to an increase in redemption requests from investors and concerns regarding the accuracy of the valuations of the funds’ investments. It has reportedly led to more than half of the £25 billion sector being locked down. The Bank of England had highlighted the commercial real estate market as one of the channels through which the referendum could increase risks to financial stability. That said, foreign investment in UK commercial real estate dropped by 50% in the first quarter of 2016 – leading some to suggest that the recent events are part of a wider slowing of the real estate market.
  • The French government announced new measures to attract London-based financial institutions to Paris, including income tax breaks of up to 50%, the right to exclude foreign assets from the calculation of wealth tax for eight years, the establishment of a single point of contact for those relocating to France and new international school classes. One of French Prime Minister Valls’ staff reportedly said that “the Brexit vote is providing us with an opportunity to show that France is business-friendly.”
  • EU leaders are using public statements to emphasize that this is critical moment for the institution’s future. German EU Commissioner Oettinger said that the EU is in “mortal danger” for the first time and that Germany must now strengthen the EU so that it does not “go downhill”. He added that the next two or three years would determine the EU’s future. Speaking about next year’s EU priorities in the European Parliament, Commission First Vice President Timmermans told MEPs that “more than ever, we need to get our heads down and work hard, to focus on key challenges ahead for our economies and societies where the EU can make a real and positive difference to people’s lives”.
  • The European Banking Authority (EBA), published its periodical update of its Risk Dashboard (data as of Q1 2016) on Thursday, summarising the main risks and vulnerabilities in the EU banking sector. The report states that increasing market volatility following the result of the UK’s referendum indicates a “significantly heightened risk outlook of EU banks”.
  • In Germany, leaders focused on the positive on Thursday. Chancellor Merkel stated that Brexit will lead to only limited economic uncertainty in Germany and that the remaining 27 EU Member States should ensure that their economies remain competitive, create jobs and foster growth. The chairmen of the two ruling parliamentary groups in the German Bundestag believe that the support for the EU in the remaining Member States would increase because of the “British chaos” resulting from the UK referendum result.

Market Updates

  • Given the importance of financial services to the UK’s economy, sources within the industry believe that none of the existing relationship models will work for the UK in the long run, and that a bespoke solution will have to be designed. Models that have allowed for a free flow of financial services have also required freedom of movement for individuals – the latter of which faces political opposition in the UK.
  • We continue to see clients and market participants seeking out opportunities, which are believed to exist for those willing to identify them. Both well-placed corporates (including US buyers with substantial offshore cash resources that cannot be easily repatriated to the US) as well as private equity sponsors are encouraging deal teams to seek opportunities where the increased purchasing power of the US dollar can be leveraged against weaker-currency priced assets. In addition, paused auction processes should provide windows of similar opportunities for nimble buyers who can move quickly. Those trends are expected to lead to an uptick in deals in the latter part of the third quarter.
  • Some clients are viewing Brexit as primarily a local UK issue, but see the “contagion risk” of other departures (e.g., Greece, Italy) as a greater concern.
  • We are not yet seeing Brexit deal terms, but buyers have sought diligence, conversations, and other forms of soft comfort from management when deals have UK exposure.


A full collection of our recent Brexit publications is available here.