Brexit uncertainty spurs financial services firms to shift £800bn in assets to EU
Heightened uncertainty over the Brexit negotiations has driven London's financial services companies to move almost £800bn assets to Europe.
Firms have continued to commit to move staff and assets away from London to Europe in a bid to protect clients and investors from the impact of leaving the bloc, according to EY.
In its latest survey of the financial services sector’s response to Brexit, EY found 36 per cent of companies had publicly confirmed or stated intentions to move operations or staff from the UK to the continent by the end of November, up from 31 per cent the previous year.
Omar Ali, UK financial services head at EY, said as uncertainty continued in parliament ahead of Theresa May’s anticipated vote on the Brexit deal next week, financial services firms had “no choice but to continue preparing on the basis of a “no deal” scenario.”
“The City is further ahead in implementing its Brexit contingency plans than many other sectors and our numbers only reflect the moves that have been announced publicly,” he said.
“The closer we get to 29 March without a deal, the more assets will be transferred and headcount hired locally or relocated.”
EY said 20 firms had announced a transfer of assets out of London to Europe, totalling around £800bn.
Dublin and Paris proved among the most popular destinations for firms relocating, while Frankfurt and Luxembourg were also high on firms’ lists.
But Ruth Lea, economic adviser to the Arbuthnot Banking Group, told City A.M. it should come as no surprise firms were preparing for Brexit.
“The negatives must be kept in perspective,” she said. “There has been a marked tendency for City organisations to exaggerate the ‘damage’ Brexit will do both before and after the referendum.”
“Moreover, there are real positives to be gained for the City after Brexit, provided the UK is free of Single Market regulations and the government takes advantage of the new-found freedoms,” she said.
This morning, the BBC reported the government would hold the delayed parliamentary vote on Prime Minister Theresa May’s Brexit deal on 15 January.
The original vote was scheduled for 11 November, but was delayed as parliamentary arithmetic made it clear that May’s deal faced a heavy defeat.
In October, the city minister said the government expected the City of London to lose 5,000 jobs because of Brexit.
John Glen said he backed the estimates of the head of the Prudential Regulation Authority, Sam Woods, on the number of job moves at a hearing of the House of Lords' EU Financial Affairs Sub-Committee.
Large financial services firms across the Square Mile have for the most part now put in place plans in case the UK leaves the EU without a deal, widely seen as a worst-case scenario by businesses.
However, the number of job moves has been smaller than initially expected, with many firms trying to move the minimum employees to satisfy EU regulators, at least in the short term.