Brexit-related changes such as relocating staff or establishing new EU offices in the financial services sector has remained subdued over 2021, continuing the muted activity since the onset of the pandemic.
According to data from EY’s Financial Services Brexit Tracker, since the UK’s official departure from the EU and the onset of Covid-19 in early 2020, there has been a significant fall in announcements of operational moves.
Less than half (44%) of financial services firms have moved or plan to move some UK operations and/or staff to the EU since the Brexit referendum, up slightly from 41% in January 2020
Over the past year, a number of large investment banks located in the UK have revised down the number of staff to be relocated to the EU, taking the number of job moves to 7,400, down from 7,600 in December 2020
Dublin and Luxembourg remain the most popular destinations for new EU office relocations, with Paris welcomes the highest number of people relocating.
Brexit in the City
Between January 2020 and December 2021, the number of financial services firms that have publicly stated they have moved or plan to move some UK operations or staff to Europe rose from 92 to 97 out of 222 companies.
Omar Ali, EMEA financial services leader at EY, said: “It’s been nearly a year since the UK officially left the European Union, but the financial sector is still working through the hangover of Brexit.
“While the majority of operational moves were made well ahead of the 2020 Brexit deadline – and before the pandemic – travel restrictions over the last two years have challenged the practicalities of relocation.
“Depending on the trajectory of the Omicron variant and its impact on international travel in the short term, delayed moves should pick up over the coming year, not least due to ongoing pressure from EU regulators.”
EY described EU regulators’ “ongoing pragmatism” in managing stability and other risks as they build greater financial strength, but said they will maintain pressure on firms to complete headcount and operational moves that have been delayed by the pandemic
Since the referendum, 24 financial services firms have declared they will transfer just over £1.3 trillion of UK assets to the EU, a figure which has remained broadly flat throughout this year.
“For many financial services firms, we are still far from being fully ‘post-Brexit’. The memorandum of understanding for the sector remains unsigned, and there is not yet a definitive outcome on equivalence. While the EU has proposed an extension to temporary equivalence for UK-based clearing beyond June 2022, it is uncertain how long this will be for.”
Dublin remains the most popular destination for staff relocations and new European hubs or offices, with 36 financial services firms announcing intentions to relocate UK operations or staff to the Irish capital. Luxembourg is the second most popular destination, attracting 29 companies in total, followed by Frankfurt with 23 companies, and Paris with 21. Other named locations include Madrid (8), Amsterdam (8), Milan (7) and Brussels (6).
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