What has been the real impact of Brexit on professional services?
British multinational professional services firm EY’s Brexit Tracker has found that more than 7,500 financial services jobs and £1trn in assets have moved to Europe as a result of the UK leaving the EU.
With just three months to go until the end of the Brexit transition period, financial services firms are making final preparations, and continue relocating staff and operations to Europe. EY’s Financial Services Brexit Tracker, at the end of the last quarter, found that over 400 UK Financial Services role relocations to Europe were announced, taking the total number of jobs leaving London to over 7,500.
Since the Referendum, 44 financial services firms have announced plans to make local hires for existing or newly created roles in Europe, equating to over 2,850 new jobs. This represents an increase of over 400 since the beginning of 2020, with Dublin, Luxembourg, Frankfurt, and Paris named as the main locations.
Since 2016, 40% of firms monitored by the EY Financial Services Brexit Tracker have confirmed at least one location in Europe where they are moving or considering moving or adding staff and/or operations to.
Dublin remains the most popular destination for staff relocations and new European hubs or offices, with 34 financial services firms saying they are considering or have confirmed relocating operations and/or staff to the city. Luxembourg is the second most popular destination and has attracted 26 companies in total.
Frankfurt has attracted 23 companies in total, 19 of which are universal banks, investment banks or brokerages. Twenty Firms say they are considering or have confirmed relocating operations and/or staff to Paris, 14 of which are universal banks, investment banks or brokerages.
Omar Ali, UK Financial Services Managing Partner at EY, commented: “Many Financial Services Firms had implemented the bulk of their relocation plans before the start of the year, and we saw very little movement in the first half of 2020. But as we fast approach the end of the transition period, we are seeing some Firms act on the final phases of their Brexit planning, including relocations. This is despite the pandemic and consequent restrictions to the movement of people, which is clearly making it harder to relocate people and adds complexity for those who were looking to commute to EU locations.
“With the prospect of a deal between the UK and EU still hanging in the balance, many Firms still remain in a ‘wait and see’ mode. The pre-trade agreement, set to be finalised at the end of October, means we could yet see a flurry of further staff and operational announcements in the weeks that follow. But the clock is running down, and with the possibility of a second COVID-19 spike threatening cross-border movement in the final three months of the transition period, Firms must now ensure that as a minimum they will be operational and can serve clients on the 1st of January 2021.”
24 of the largest financial services firms (ten banks, nine insurance providers, and five wealth and asset managers) have so far announced an intention to transfer assets out of the UK to Europe ahead of Brexit. Not all firms have publicly declared the value of the assets that could be transferred, but of those that have, EY’s Financial Services Brexit Tracker analysis suggests a conservative estimate of £1.2tn, up from £1tn at the end of 2019.