Paris is set to become Europe’s post-Brexit trading hub as the world’s biggest banks and asset managers prepare for life after the UK leaves the European Union.
Over a third of UK financial services firms have confirmed or are considering relocating their operations or staff to Europe, according to EY’s Financial Services Brexit Tracker.
The accounting firm has been tracking statements from 222 leading financial services groups in Britain since the 2016 EU referendum regarding their efforts to minimise disruption for customers, particularly in the event of a no-deal Brexit.
As of September 10, precisely 77 of the companies followed said they were considering moving, or would shift, some operations or staff to elsewhere in Europe. These included 28 banks and brokerages, 22 wealth and asset managers, and 15 insurers and brokers.
EY’s research shows that firms are being more specific about their plans, with 25% of companies confirming at least one relocation destination in Europe, compared with 19% at the end of 2017.
Twenty of the largest UK-based financial services firms so far have confirmed plans to relocate front office roles, comprising 57% of all job relocations tracked. Among the front office roles, the types of positions being relocated include sales, trading and distribution.
Dublin and Frankfurt remain the frontrunners for relocation when it comes to banks, insurers and asset managers as the ideal cities to set up legal and regulatory structures in order to continue doing business across the EU.
However, Paris is emerging as a favourite as when it comes to trading, which has a bigger impact on the economy due to the job creation and taxes that go with it. Madrid and Milan have gained traction with investment banks.
It is estimated that over 2,500 new jobs have been created or are in the process of being created by financial services firms across Europe for Brexit-related work. Thirty-eight firms have suggested that they have or are currently hiring staff, and around 500 of these jobs are new roles created in London.
“Firms are no longer merely talking about their plans. Across Europe, the wheels are in motion on relocation and hiring strategies as firms make their ability to serve clients from Day One of Brexit their number one priority,” Omar Ali of EY, said in a statement.
Over the past quarter, an increasing number of companies have referred to the risk of a “hard or no-deal Brexit” when discussing their plans, he added.
“With just six months to go, although progress by firms is broadly positive, we are far from out of the woods, and in case of a cliff edge, there is still much work to be done to be ready for Day One of Brexit,” EY warns.
Bank of America is set to move 200 jobs to Paris, HSBC has a “contingency plan” and Scottish asset manager Baillie Gifford is to establish a Dublin arm to Brexit-proof its business, as reported by International Investment.
The Square Mile could see up to 12,000 jobs lost in the short-term aftermath of Brexit with thousands more at stake longer term, the City of London Corporation has warned.
According to the FT, the UK’s City minister, John Glen, said during a visit in Tokyo that Britain will do “whatever it takes” to defend the position of London as a global financial centre against the potential disruption of Brexit.