More than a third of UK financial services firms are either considering or have decided to transfer certain operations or staff to continental Europe in the run up to the UK’s exit from the European Union next year, a survey has revealed.
According to EY’s Financial Services Brexit Tracker, which monitors the intentions of 222 of the UK’s largest companies in the sector, 34% confirmed they had either moved staff and operations from the UK or were looking to do so.
Despite the announcement in March of a proposed transition period running from 29 March 2019 to 31 December 2020, EY’s survey noted that the number was two percentage points higher than since the last quarter.
“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,” said Omar Ali, UK financial services leader at EY.
“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.”
Over the weekend, BMW and Siemens joined Airbus in raising concerns over the state of the Brexit negotiations. Last week, Airbus, which employs more than 14,000 people in the UK, raised the possibility of exiting the country if no transition deal was signed before Brexit comes into effect in March next year.
Investment experts in Dublin – cited by EY as one of the favoured EU locations along with Frankfurt – warned in April that asset managers had just three months remaining to apply for a Dublin authorisation should the UK crash out of the EU without an agreement over its future relationship with the bloc.
“Companies’ worst-case scenarios appear to be less drastic than initially feared, but words are now becoming actions and plans are becoming reality,” EY’s Ali said.
However, he said companies were choosing more than one location, bolstering existing operations and opting for established financial services centres.
“This points to the fact that it is unlikely we’ll see one pre-eminent financial services hub emerge in [continental] Europe, and London will remain a leading global financial centre,” Ali said.