A growing number of investment professionals believe the UK is heading for a hard Brexit and the country's departure from the European Union will be detrimental to the City's competitiveness, with the number expecting to leave the UK as a result jumping by nearly 25% in a year.
Research from CFA UK found the proportion of City investment professionals expecting a hard Brexit, whereby the UK leave the EU without a deal on its future relationship with the bloc, has grown to 22.5% from 17% at the same time last year.
Meanwhile, the number expecting a soft Brexit, whereby the UK leaves the EU with a deal that keeps it as closely aligned as possible, has fallen from 67% last year to just 58%.
In its latest survey of more than 800 members analysing how Brexit will affect investment professionals currently working in the UK, CFA UK also found an increasing proportion are planning to leave the UK as a result of Brexit, growing to 11% from 9% last year.
Commenting on the findings, Will Goodhart, chief executive of CFA UK, said that while "correlation is not causation…It would be surprising if there was no relationship" between the growing number expecting a hard Brexit and the proportion of members expecting to leave.
CFA UK also found a smaller number of respondents felt their job is secure in light of Brexit, with just 54% of UK respondents believing so, down from 60% last year. Meanwhile, the number of EU respondents who feel their jobs are secure has fallen from 43% to 39% in the same period.
Looming threat of no deal
The findings come amid recent warnings issued from the governor of the Bank of England Mark Carney, who told ministers in a Cabinet meeting in mid-September that a no-deal Brexit could lead to economic chaos, resulting in property values falling by a third.
In addition, a recent report from the International Monetary Fund warned the UK faces a "significantly worse" outlook if Prime Minister Theresa May fails to reach a Brexit agreement with the EU.
May is also confronted by ongoing opposition within her own party to her so-called Chequers agreement, which she recently told the BBC was the only alternative to a no-deal scenario.
In addition, she also faces deadlock in Brussels with EU negotiators unable to accept her proposition without controversial practical and political concessions made on the future of the border between the Republic of Ireland and the North.
JP Morgan issued a report on 17 September that calculated a 10% chance of no deal, but a 60% chance of a "smooth transition" to an agreed trade deal.
The CFA's survey found that UK respondents were most likely to expect a hard Brexit, at 26%, while 72% of international passport holders expect a soft Brexit.
Goodhart said: "Our international respondents - whether from North America, Asia or elsewhere - largely continue to believe that a soft Brexit is the most likely outcome and would probably be surprised and disappointed by a hard Brexit."
Patches of optimism
Amid the growing number of investment professionals planning to leave the UK as a result of Brexit, the number of EU respondents now expecting to stay has increased from 43% last year to 49% in the latest survey.