-U.K. heads for unchartered waters
The U.K. is heading towards the unknown as financial institutions are preparing to move assets from the world’s biggest financial center in London to other centers in Europe. Assets worth nearly £800 billion are transferring from Britain to new financial hubs in the European Union ahead of Brexit, according to Ernst & Young research released last month.
Since the EU Referendum, 36 percent (80/222) of U.K. financial service companies tracked said they are considering or have confirmed relocating operations and/or staff to Europe. This rises to 56 percent (27 out of 48) amongst global banks, investment banks, and brokerages.
Thirty percent (67/222) of companies tracked have confirmed at least one relocation destination in Europe to which they are moving or considering moving or adding staff and/or operations. Dublin attracted six and Paris attracted five more financial companies from September 2018 to the end of November 2018.
Financial services companies have created around 2,000 new European roles in response to Brexit, with Dublin, Luxembourg, Frankfurt Paris as the most popular destination for these new positions.
Since the EU Referendum, 20 companies monitored have announced a transfer of assets out of London to Europe. Not all firms have publicly declared the value of the assets being transferred, but the Brexit tracker has followed public announcements worth around £800 billion.
“Deal or no deal, financial services companies’ main priority is to protect their customers and investors from any post-Brexit fall-out and operational decisions are following a ‘prepare for the worst, hope for the best’ strategy. Whilst roles will no doubt move from the U.K., many firms are only moving those employees deemed essential and are hiring locally given the expense of relocation,” Omar Ali, U.K. Financial Services leader at Ernst Young said.
Growth in the U.K. is also weakening. The Bank of England cut its growth forecast for 2019 from 1.7 percent to 1.2 percent, blaming a slowing global economy as well as Brexit uncertainty for the sharp downward revision, adding that a 25 percent chance of a recession this year is possible.
Uncertainties are running high creating alarm in the economy with the U.K. heading for unchartered waters without a deal as finance companies shift their assets and people.
