Brexit has already pushed over 440 financial services firms to Europe

More than 440 UK banking and finance firms have relocated part of their business, moved staff or set up new entities in Europe following Brexit, with London losing over £100bn of insurance and asset manager funds, according a new report by thinktank New Finance. The reports finds that more than 420 firms have set up new European hubs, with London also losing banking assets worth £900bn to Europe. Some 7,400 staff have moved or been recruited in local hires in response to Brexit, New Finance says, with the number expected to rise in the next few years. According to New Finance, the “damage” caused by Brexit is “higher than previous estimates” but still underestimates the potential long-term impact of the UK’s exit from the EU. “‘Getting Brexit done’ is only the end of the beginning of the process: given the limited equivalence arrangements in place, over time we expect there to be a drip-feed of business and activity from the UK to the EU,” New Finance says. It also predicts that about 300 to 500 EU firms may open an office in the UK, fewer than the forecast of about 1,000 firms. It says these will be mainly smaller companies. New Finance says more than half of companies using the temporary permissions regime put in place for EU firms to access the UK market already have an office or base in the UK. The report adds that with the high number of UK companies relocating or setting up new entities in Europe, many banking and finance firms have already secured their own access to European clients and business. “This is perhaps an opportunity to draw a line in the sand, treat Brexit as a sunk cost, and move beyond the debate of the past few years of how closely the UK should remain aligned to the EU in exchange for more access to EU markets,” it says. But it adds that wider regulatory access is “unlikely to be forthcoming”. “It is perhaps better for the industry to take the damage from Brexit on the chin and focus instead on recalibrating the framework in the UK so that it is more tailored to the unique nature of the UK financial services industry,” the report says. The UK could also seek closer partnerships in key sectors with markets outside the EU, it says. New Finance says many UK firms have intentionally split their business and chosen different locations for their European operations. About 70 firms have expanded in other EU cities in addition to their main post-Brexit hub. “This redistribution of activity across the EU has wound the clock back by about 20 years,” New Finance says. Dublin attracted the highest number of UK firms looking for a new base in Europe post-Brexit, with 135 entities, or 25% of the total, choosing the Irish capital to either relocate or set up a new entity, the report finds. Paris was the destination for 102 firms, followed by Luxembourg on 93, Frankfurt on 62 and Amsterdam on 48. New Finance predicts Frankfurt will attract the highest number of assets from the UK over the longer term, while Paris will be the winner when it comes to staff. Banks account for 60% of firms that chose Frankfurt as their main EU base, the report finds, while nearly two thirds of those moving to Amsterdam are trading platforms or exchanges. One third of asset managers moving a base or part of their business to the EU have chosen Dublin. “The shift in business, assets and legal entities will gradually chip away at the UK’s influence in the banking and finance industry in Europe and around the world, as a greater proportion of business is authorised by and conducted in the EU,” New Finance says. London is expected to remain the leading financial centre in Europe, but over time other cities will “chip away” at London’s dominant position, it adds.

Brexit has already pushed over 440 financial services firms to Europe

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