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Summary
- A new study has found that 40% of the financial services firms surveyed have either moved or will move operations from the UK to the EU.
- Dublin was the most favoured new hub followed by Luxembourg.
- 57 firms have talked about negative financial cost impact of Brexit on their businesses.
More than 40 per cent financial services companies are thinking to move out of the UK or have already moved out following the Brexit restrictions to the European Union. A new study, which has surveyed around 222 firms, found out that around 95 firms wanted to move out of the UK to one of the EU countries. This would mean that at least 7,600 people in the UK will lose their jobs to their EU counterparts. These firms are from various businesses like universal banks, asset managers, private equity firms, and fintech companies, among others.
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Also read: How A Delay in Brexit Decision Is Going to Impact UK Financial Services
About 26 per cent or 57 of the firms surveyed have said that their businesses are facing or would have to bear the financial impact of Brexit in the near future. Last year, 49 firms were facing such issues. As many as 24 financial services firms have publicly stated since the Brexit Referendum that they would be transferring UK assets worth £1.3 trillion to the EU against £1.2 trillion in October 2020. However, not all firms disclosed what would be the asset value of the transfer.
Also read: What does EU proposal to delay application of post-Brexit trade deal means for Britain?
Around 36 financial services firms have stated that they are already relocating or would relocate businesses or staff to Dublin, making it the most favoured destination in Europe for new offices. Luxembourg was the second-most favoured destination as it has been chosen by 29 companies – 14 of them are wealth managers and six of them being universal banks, investment banks or brokerages. Frankfurt was the third-most favoured destination as 23 companies wanted to shift operations there.
Experts have said that uncertainties over movement of operations to various parts of Europe might create fragmented markets, which would make financial services costlier for users and damage competitiveness of both the UK and the EU. They also said that UK and Scotland in future would be able to hold on to their reputation as global financial hubs by developing associations and competing with markets beyond the EU.
Also read: Why Bank of England Is Planning Tougher Capital Rules Than The EU
In two months after the final Brexit deal, 10 financial services companies had requested the government to ensure competitiveness of the UK companies in the business. Businesses have time and again said it is necessary to have an environment accessible to businesses and have sought assurance that London would be able to retain its position as a business hub.
Other experts have said that both UK and EU firms are awaiting the details in the MoU on financial services that would come out soon. Depending on the outcome, there would be a new round of discussions on the framework and that would define the kind of relationship both the markets would share in future.
