Ever since the United Kingdom voted to withdraw from the European Union on June 2016, various businesses and banks have warned that they would be moving jobs and operations to other EU-member states, in order to safeguard against the consequences of Brexit.
According to a new report that was published by New Financial, a think tank, 275 firms have “moved or are moving some of their business, staff, assets or legal entities from the UK to the EU to prepare for Brexit.”
The authors of the report stated: “These moves are the inevitable consequence of Brexit. The political uncertainty since the referendum and failure to reach a deal has forced firms to prepare for the worst and put their contingency plans into action. Much of the damage has already been done and for many firms, Brexit happened sometime last year.”
They added: “This shift will chip away at London’s position as the dominant financial centres in Europe; increase cost, complexity and risk in European financial services; reduce the UK’s influence in the banking and finance industry at a European and global level; and hit tax receipts and exports in financial services.”
The think tank says that this has resulted in 5,000 expected personnel moves or local hires and that the number is expected to increase in the coming years.
All of these falls neatly in line with other reports that have lately scaled back the estimates over jobs lost to Brexit. In a major Brexit note that was sent to clients, Nomura, an investment bank, stated: “The largest investment banks continue to decrease the amount of projected employee relocations.”
Overall, Nomura said that it is now expecting 10,000 UK financial services jobs to be at risk of relocation because of Brexit. The number is double the estimate of the Bank of England’ for “Day One” job losses, however, it is well below the earlier estimates from consultancies such as EY. Reuters and Oliver Wyman that were estimated last September that only 630 roles had been relocated as an outcome of Brexit.
New Financial said that while some may believe that the number of jobs being lost to Brexit does not seem to be that big of a deal, it is the shift in underlying business that “is more significant than headlines about the number of staff.”
The authors of the report disclose: “Our conservative estimates show that banks and investment banks are moving around £800bn in assets; asset managers have so far transferred more than £65bn in funds, and insurance companies have so far moved £35bn in assets.”
It added: “There is a wide range in how different sectors have responded: for example, nearly half of asset managers, hedge funds and private equity firms in our sample have chosen Dublin, while nearly 90% of firms moving to Frankfurt are banks or investment banks.”