Brexit: £800bn of assets to move from London to European financial hubs ahead of EU departure

More billions may shift to continent in coming weeks as political uncertainty continues, says EY

Financial firms will shift almost £800bn of assets from the UK to the continent ahead of Brexit on 29 March, according to new analysis.

EY cautioned that £800bn was a “conservative” estimate warned that more assets could be moved as Brexit draws nearer.

City firms have continued to relocate staff and assets away from London to Europe in the face of increasing uncertainty over the UK’s relationship with the EU.

Twenty of 222 firms monitored by EY’s Brexit tracker survey have already moved assets from London to mainland Europe. While not all of those have confirmed the value of those assets, public announcements have revealed around £800bn is expected to move.

More than a third of companies tracked are considering or have confirmed relocating operations and/or staff to Europe, a figure that rises to 56 per cent amongst universal banks, investment banks and brokerages.

Around 2,000 new jobs have been created in European financial hubs including Dublin, Luxembourg, Paris and Frankfurt, which have been ramping up efforts to attract business from London as political turmoil drags on. EY estimates that this figure could rise to 7,000 “in the near future”.

Dublin has now attracted 27 companies up from 21 in the last quarter and Paris has gained in popularity, with 15 companies confirming they are moving or adding some staff and/or operations to the French capital, up from 10.

Two more companies confirmed plans to move or add some staff and/or operations to both Frankfurt and Luxembourg, with the numbers rising from 15 to 17 and 14 to 16 in the last quarter respectively.

Omar Ali, UK financial services leader at EY, said: “In anticipation of the parliamentary vote in January, the City will be watching closely to see if the proposed Brexit deal will be accepted or whether it’s back to the drawing board for the government. As things stand, and per regulatory expectations, financial services firms have no choice but to continue preparing on the basis of a “no deal” scenario.

“The City is further ahead in implementing its Brexit contingency plans than many other sectors and our numbers only reflect the moves that have been announced publicly. We know that behind the scenes firms are continuing to plan for a no-deal scenario.

“The closer we get to 29 March without a deal, the more assets will be transferred and headcount hired locally or relocated. Inevitably, the contingency plans are for day 1 only, and in the event of no deal will represent the tip of the iceberg as longer term plans will be more strategic and extensive than those publicly announced to date.”

From September 2018 to the end of November 2018, nine companies have announced that they will be implementing product adjustments in light of Brexit.

These include transferring customer insurance policies to new European subsidiaries and setting up European fund ranges. Two retail banks have recently announced that they will set aside specific funds to help clients and extra money to help manage Brexit.