Dublin retains Brexit relocation top spot for financial services firms
Almost 7,600 jobs have been moved to Europe by UK-based financial services firms in relation to Brexit, up from 7,500 in October 2020. 95 out of the 222 companies tracked by consulting firm EY for its Financial Services Brexit Tracker fuelled these moves. EY said that since the 2016 Brexit referendum, 40% (89 out of 222) of the firms it tracked have confirmed at least one location in Europe where they are or are considering moving or adding staff and/or operations to. In addition, 12% of the firms have confirmed multiple locations in Europe for possible staff relocations.
Ireland’s capital Dublin still draws the most staff relocations with 36 financial services firms saying they are considering or have confirmed relocating UK operations and/or staff to the city. Luxembourg and Frankfurt follow, having attracted 29 and 23 companies in total. Paris sits in fourth position with 20 firms saying they are considering or have confirmed relocating operations and/or staff there. Other cited locations include Madrid (8), Amsterdam (8), Brussels (6) and Milan (5). EY calculates that almost £1.3trn of UK assets have migrated or are in the process of migrating to the EU as 24 financial services firms – including 10 banks, nine insurance providers, five wealth and asset managers – have publicly declared so since June 2016.
Omar Ali, EMEIA Financial Services Managing Partner for Client Services at EY, commented, “Financial services firms across Europe have a number of chapters still to write before they can close the book on Brexit. After the major hurdle of standing up new EU hubs, the days of significant swathes of asset and job relocation announcements appear to have passed and will likely be replaced by the slower yet ongoing movement of people and assets to Europe for compliance purposes.”
Brexit's negative sentiment on the rise
Ali said UK and EU Firms are awaiting the detail of the upcoming Memorandum of Understanding on Financial Services. He highlighted the ongoing uncertainty poses the risk of fragmented markets, “which is inefficient and costly for all Financial Services users and potentially damaging to the global competitiveness of both the UK and EU.” He added, “Fragmentation of European financial services will serve to only benefit the US and Asia. But these challenges can be overcome if the right areas are prioritised - although passporting and equivalence debates command the headlines, there are arguably far more complex matters involving data, capital, skilled talent and frictional costs, that need to be settled."
Furthermore, EY’s barometer found out 26% (57 out of 222) of firms have publicly stated that Brexit is impacting or will negatively impact their business, up from 49 firms in January 2020. Despite concerns and calls for more regulatory clarity from UK financials, Ali assessed the UK will be as focussed on building relationships and competing with markets beyond European borders, as it will be on building its new relationship with the EU. “There is already much activity underway as the UK redefines its future - the reviews into the UK Listing Regime and UK FinTech sector will be particularly key to its global positioning, and many eyes will be monitoring how the UK progresses new regulation on the emerging ESG and sustainable finance agendas,” he commented.