23 large financial firms have shifted roughly £1 trillion out of the UK to the rest of the EU in the run up to Brexit, “up from £800 billion last quarter”, according to the consultancy EY.
In its latest “EY Brexit Tracker”, published on 20 March, the firm said that “7,000 high paid finance jobs” were moving with the assets to rival financial centres such as Dublin, Frankfurt, Luxembourg and Paris.
“The nature of the roles that are shifting, often moving for regulatory reasons, are at the very top of the salary spectrum. Even at a conservative estimate that the average salary was at the bottom of the highest tax bracket of £150,000”, the firm reckoned the UK would lose round £600m in employment taxes.
In addition to the 7,000 relocated positions, “more than 2,300 new jobs have been added or are in the process of being added to financial services firms in response to Brexit” in Europe. This figure included “just over 500 are people hired/or to be hired in London,” EY stated in a news release.
The 23 financial outfits are made up of 10 banks, 8 insurers and 5 investment managers. According to the EY release:
“Not all firms have publicly declared the value of the assets being transferred, but out of those that have given a value of the assets which could move, EY’s Brexit Tracker analysis suggests a conservative estimate of around £1 trillion, up from £800 billion as at 30 November 2018. That total is likely to increase as we move towards Brexit, with the total assets of the UK banking sector alone estimated to be almost £8 trillion.”
Dublin remained the most popular place to relocate operations. EY said: “28 companies have confirmed they are moving or adding some staff and/or operations to Ireland’s capital city, up from 27 last quarter.”
Frankfurt was second, with 21 firms shifting staff and/or operations, EY said. That was followed by Luxembourg, with 19 relocations (including 10 by asset managers). Other destinations have been Paris (18 moves), Amsterdam (6), Madrid (6), Milan (5) and Brussels (5).
The firms are relocating operations in order to maintain access to the EU single market after Britain leaves the bloc.
EY said its Brexit Tracker monitored the public statements of 222 large financial service firms between 24 June 2016 and 28 February 2019.