UK premier seeks unity on today's EU Withdrawal Bill vote.
Photo: Reuters/Peter Nicholls
Members of the UK parliament will vote Tuesday on the EU Withdrawal Bill and it is the hope of many businesses that this will finally bring some much-needed clarity, even if the bill’s road to the House of Commons has been far from straight. In the meantime, a number of businesses have taken independent action to relocate to an EU base. Although it is difficult to get precise figures due to the ever-changing environment, in this article, we try to bring you up to date with how this has impacted Luxembourg so far.
UK prime minister, Theresa May, is in for a difficult week as she struggles to unite her own party, let alone the opposition, on how best to leave the European Union. Members of the UK parliament are set to vote on the EU Withdrawal Bill on 12 June, which has already faced no less than 15 defeats in the House of Lords.
With only ten months to go, May is coming under mounting pressure from businesses clamouring for clarity on what kind of customs union the UK will have with the EU post-Brexit. However, regardless of the outcome of this week’s vote, many have already taken the ball into their own hands and started transferring funds and/or setting up subsidiaries in EU countries, including Luxembourg.
“In the wake of the Brexit vote, a relatively high number of financial companies have opted to relocate to Luxembourg to maintain ease of access across the European market,” said Luxembourg statistics and economic studies institute, Statec. According to a report published on 30 May 2018, “Statec believes that by early 2018, about 250 jobs created were linked to this phenomenon.”
A previous study by KPMG Luxembourg confirms this trend. It states that, “Despite the Draft Withdrawal Agreement, Brexit still brings a lot of uncertainty and questions and some businesses have taken steps to prepare for the post-Brexit world.”
KPMG reports that thus far, 35 companies have chosen to relocate to Luxembourg, putting it considerably further ahead than Ireland at 22; Germany at 15, the Netherlands at 11; France at 10; Belgium at 5 and Spain at 2. Most of the companies choosing Luxembourg come from the asset management and insurance sectors.
Indeed, in a recent interview with Delano, Claude Wirion, managing director of the Luxembourg insurance regulator CAA confirmed that, “11 insurance companies have moved to Luxembourg and there are more in the pipeline,” a fact that saw non-life business in Luxembourg increase by a remarkable 45.71% in Q1 2018.
Ernst & Young Luxembourg also recently carried out a survey of senior managers in over 55 wealth and asset management firms that found that, “Just over half (51%) of respondents are working on or planning to establish entities in Europe….41% say they are planning entities in Luxembourg.”
Thus far, Delano has reported that: US asset manager MFS is looking to bolster its existing Luxembourg office and that Columbia Threadneedle has decided to transfer £10 billion of assets from its UK funds range to Luxembourg equivalents. There are many more who have made such moves without announcing it in the press.