The New Financial think tank has released a report on the impact of Brexit on the business health picture in Britain. The think tank has “identified more than 440 financial services firms in the UK that have responded to Brexit in some way by relocating part of their business, staff, or legal entities to the EU”.
“We have identified more than £900bn in bank assets (roughly 10% of the entire UK banking system) that have been or are being moved,” New Financial said, reporting the “bad news” from the UK’s perspective.
Over 420 of the 440 relocated businesses are setting up new hubs for their EU business, while the report has identified more than 500 separate moves across the European bloc.
Since Britain decided to leave the EU in 2016, the finance industry has added thousands of positions in mainland Europe, with Dublin, Luxembourg and Frankfurt seeing the biggest gains.
“Dublin has emerged as the clear winner in terms of attracting business from the UK, with 135 firms choosing the Irish capital as a post-Brexit location. This represents 25% of all the moves that we identified, ahead of Paris with 102 firms, Luxembourg with 93, Frankfurt on 62, and Amsterdam on 48. In the longer-term, we expect Frankfurt to be the ‘winner’ in terms of assets, and Paris in terms of jobs,” the report said.
In terms of destinations for various sectors, third of all asset management firms that have moved something as a result of Brexit picked Dublin, while Frankfurt was the place chosen by a large portion of the banking industry.
Almost two thirds of firms relocating to Amsterdam are trading platforms, exchanges or broking firms, said the report.
Researchers of New Financial argued that the real picture is worse than the estimates they put forward, paining a bleak present for the City of London.
“While the headline numbers are stark, there is no question that London will remain the dominant financial centre in Europe for the foreseeable future. Firms are keen to keep as much of their business in London as possible and even the biggest relocations represent a maximum of 10% (so far) of the headcount at individual firms. However, over time other European cities will chip away at London’s lead,” New Financial said.
Britain left European Union Customs Union and European Single Market, after the Brexit transition period ended on 31 December 2020.
For businesses and consumers in the financial services sector, there may have been changes on or before 1 January 2021, with the government producing extensive advice to firms and customers in the post-Brexit environment.