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More than a third of financial firms shifting business away from the UK because of Brexit have selected Dublin as their new hub, according to a New Financial thinktank report written by William Wright and colleagues. Pictured: Ha’penny Bridge and the River Liffey in Dublin, 12 June 2015. Photo credit: Robert Linsdell via Flickr (CC BY 2.0)
275 financial firms have shifted activities and more than £900bn in assets from the UK to other EU countries ahead of Brexit, a thinktank has found.
Dublin has been the biggest recipient, followed by Luxembourg, according to the report “Brexit & the City – the impact so far” issued by New Financial, a thinktank based in London, on 8 March.
The thinktank wrote:
“Our conservative estimates shows that banks and investment banks are moving around £800bn in assets; asset managers have so far transferred more than £65bn in funds; and insurance companies have so far moved £35bn in assets.”
More than half of relocations went to either Ireland or the grand duchy. New Financial stated:
“Dublin has emerged as the clear winner in terms of attracting business from the UK, with 100 firms choosing the Irish capital as a post-Brexit location. This represents 30% of all the moves that we identified, well ahead of Luxembourg with 60 firms, Paris with 41, Frankfurt on 40, and Amsterdam on 32. We expect these numbers to increase significantly in the near future.”
Firms are not necessarily picking a single location for their new EU hubs, but selecting different cities for different business lines, New Financial wrote. “For example, roughly half of all asset management firms that have moved something as a result of Brexit have chosen Dublin.” Nine out of ten new EU hubs in Frankfurt are banking units, “while two thirds of firms moving to Amsterdam are trading platforms, exchanges or broking firms.”
The moves are likely to be fairly permanent, as financial firms have implemented expensive no-deal contingency plans that managers will be reluctant to undo any time soon, New Financial said. It wrote:
“Many large firms have had their new entities in the EU up and running for months, and having spent tens or hundreds of millions of dollars on their contingency plans are not going to relocate business back to the UK anytime soon.”
The thinktank tallied “nearly 5,000” employee transfers or local hires ahead of Brexit, but said the number of staff moves would ratchet up in the coming years. It said:
“Firms are keen to move as few staff as possible and so far at least regulators have been flexible. This will change in the next few years.”
“Business will continue to leak from London to the EU, with more activity being booked through local subsidiaries.
“This will reduce the UK’s influence in European banking and finance, reduce tax receipts from the industry, and reduce financial services exports to the EU.”
That said, “there is no question that London will remain the dominant financial centre in Europe for the foreseeable future.” But, New Financial reckoned, “over time other European cities will chip away at London’s lead.”