Some £800bn (€890bn) of assets have already left the UK for locations across the EU, with more expected to be confirmed as a number of key businesses are yet to declare the volume of assets leaving the country in response to Brexit, according to the latest EY Financial Services Brexit Tracker.
The Tracker follows 222 financial services companies in the UK. Of these, 20 have announced a transfer of assets out of London to other places in Europe, with the £800bn figure reflecting public announcements, EY said.
In terms of staff, the Tracker finds that 36%, or 80 of the 222 companies have said they are considering or have confirmed relocation of staff and/or operations. The ratio is higher, 56% or 27 of 48 universal banks, investment banks and brokerages. Dublin and Paris have been highlighted as locations that attracted additional confirmed relocations between September and the end of November 2018. Luxembourg and Frankfurt are other attractive locations, the Tracker data suggest.
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."
EY characterises the assets committed to relocation thus far as "still modest" given that the UK banking sector alone is estimated to be some £8trn. However, it warns that the figure "may become larger as we move towards Brexit".
The Tracker currently estimates that around 7,000 City jobs could relocate from London.
"Deal or no deal, financial services companies' main priority is to protect their customers and investors from any post-Brexit fall-out and operational decisions are following a "prepare for the worst, hope for the best" strategy. Whilst roles will no doubt move from the UK, many firms are only moving those employees deemed essential and are hiring locally given the expense of relocation," Ali added.