Omar Ali of EY, a consulting firm, reckons Britain-based financial firms will revamp their “temporary contingency plans” once the post-Brexit EU-UK relationship is more clearly defined. Photo credit: EY
Four more major financial companies decided to shift operations from the UK to the grand duchy between March and May in order to keep their access to the EU market after Brexit, a consulting firm has found.
In EY’s quarterly “Brexit tracker” poll, 41% of 222 large financial firms said they planned to “move some of their operations and/or staff from the UK to Europe”. The figure was 39% the previous quarter. EY stated:
“Dublin remains the most popular European city for relocation; 29 companies are considering or have confirmed the relocation of operations and/or staff to the Irish capital. However, in the last three months, Luxembourg has seen the largest increase in companies choosing to relocate staff and operations, with the total confirmed to date rising from 19 to 23.”
Luxembourg remained “a prime location for asset managers”, the consulting firm stated. Frankfurt, preferred by “large investment banks”, has attracted a total of 23 firms, up from 22 companies three months ago.
However, EY said the total amount of assets that firms plan to shift to the EU “is unchanged at around £1 trillion” and the number of jobs likely to be relocated “remains flat at around 7,000”.
The consultancy reckoned that the (at least) 6 month delay in Britain leaving the bloc meant financial services firms had “paused their Brexit planning between March and May.”
According to Omar Ali, UK financial services leader at EY:
“A more sustainable approach will need to follow once the long-term level of UK/EU market access becomes clearer.
“In the event of a ‘no deal’, some of the optimisation needed will no doubt move higher up the agenda. Overnight, UK firms would lose their ability to passport services and branches into the EU. Neither would they have any EU equivalence determinations to fall back on, putting them at an immediate disadvantage to other third countries, such as the US, Singapore and Hong Kong.”
A “no deal exit” will lead to “significant restructuring for firms”, Ali stated.