Over a third of the UK’s largest financial services firms have either decided to move parts of their operations to European Union countries ahead of Brexit, or are considering doing so – a study has found.
The latest EY Financial Services Brexit Tracker, a quarterly report into the impact of Brexit on the UK’s financial services industry, found that 75 of the 222 firms surveyed (34%) plan to move some of their operations or staff from the UK to the EU27.
This represents a two percentage point rise since the last Brexit Tracker was published three months ago.
Despite agreement in principle being reached in March for a 21-month transitional period to December 2020, the study found that UK financial firms are increasingly drawing up contingency plans.
Of the 222 companies surveyed, 53 (24%) have decided upon at least one relocation destination. Dublin and Frankfurt remain the favourites, attracting 21 and 12 firms respectively.
Among asset managers, Dublin is the favourite relocation destination, while Frankfurt is the more popular destination for banks.
The number of companies that have published an estimate of the number of jobs that could be relocated because of Brexit has risen to 32 from 28 in March.
Roughly half of the relocations are expected to be front office positions, such as broker-dealers, sales and trading, and distribution.
The number of UK-based positions that could be relocated within the EU27 remains broadly flat since the last quarter at around 10,000 posts.
Omar Ali, UK financial services leader at EY, said: “The transition period, when confirmed, means that we avoid the much-feared cliff edge, but the level of change to how financial services firms operate will still be significant and the time window to meet these challenges is short.
“Until there is more certainty around key issues, such as the degree of access, movement of people and cross-border contract continuity we should continue to expect companies to make operational moves, and prudently stick to their original contingency plans.”
● The head of the International Monetary Fund Christine Lagarde has said she expected financial firms will abandon the UK in large numbers after Brexit.
Speaking at a conference in Dublin this morning ahead of the twentieth anniversary of the launch of the single currency, Lagarde called on EU institutions to increase regulatory and supervisory capacity ahead of Brexit-related relocations to the eurozone.
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