More than 330 financial firms have shifted business from the UK to another location in the EU in advance of Brexit, 60 alone since March, a recent report has found.
Dublin and Luxembourg have received the biggest inflows of this financial business, but companies have been careful not to put all their eggs in one basket, according to New Financial, a London-based thinktank focused on the capital markets.
New Financial also cast doubt on Britain’s ability to regain these assets and jobs in the foreseeable future.
“We have identified 332 firms in the UK banking and finance industry that have responded to Brexit by relocating part of their business, moving some staff, or setting up new entities in the EU,” the thinktank stated earlier this month. That is 63 more firms since the outfit’s previous Brexit report, released in March 2019.
However, New Financial noted the relocations vary greatly in size, “from an asset management firm setting up a new authorised entity in Luxembourg to a bank like Barclays moving £160bn of assets to Dublin.”
The moves were made to guarantee access to the European single market.
Firms have been executing a strategy of geographic diversity, instead of shifting business out of London en masse into a new super-hub. The thinktank reported that:
“... no single financial centre has dominated these relocations. Many firms have deliberately split their business and chosen separate cities as hubs for different divisions, and we identified 48 firms that are expanding in other EU cities in addition to wherever they have chosen as their main post-Brexit hub.”
That said, Dublin was the top destination, with 115 firms setting a post-Brexit business there, 16 more than at New Financial’s earlier count in March 2019. Luxembourg was second, with 71 financial company relocations (11 more since March), followed by Paris with 69 (up by 28), Frankfurt with 45 (a gain of 5) and Amsterdam with 40 (8 more).
Many firms executed on “worst case” scenarios, New Financial reckoned. That means these operations are unlikely to return to the UK in the medium-term. The thinktank stated:
“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 relocation are not going to move business back to the UK anytime soon. The scale of relocations significantly reduces the potential benefit of the granting of equivalence or of any potential future deal in financial services between the UK and EU.”