Over 275 financial firms are moving a combined $1.2trn (£925bn) in assets and funds and thousands of staff from Britain to the European Union amid uncertainty over a "no-deal" Brexit, a report shows.
The report by the New Financial think tank, one of the most detailed yet on the impact of Brexit on financial services, said Dublin alone accounted for 100 relocations, ahead of Luxembourg with 60, Paris 41, Frankfurt 40, and Amsterdam 32. The move is costing up to $4bn the think tank added.
"This is not Project Fear; this has already happened," says William Wright, the managing director of New Financial and one of the authors of the report. "It has been apparent to everyone in the City ever since the referendum that they needed to prepare for a hard Brexit," he added.
This is not Project Fear; this has already happened"
Although the City of London's dominant position as a global financial center remains intact, the report highlights that Brexit has forced financial firms to prepare for whatever regulatory environment will emerge between the EU and Britain as Brexit negotiations continue.
The independent think tank said half of the affected asset management firms, such as Goldman Sachs Investment Management, Morgan Stanley Investment Management and Vanguard, had chosen Dublin, with Luxembourg the next port of call, attracting firms like Schroders, JP Morgan Wealth Management and Aviva Investors.
Nearly 90% of all firms moving to Frankfurt are banks, while two-thirds of those going to Amsterdam are trading platforms or brokers. Paris is carving out a niche for markets and trading operations of banks and attracting a broad spread of firms.
"We expect the headline numbers to increase significantly in the next few years as local regulators across the EU require firms to increase the substance of their local operations," the report said. "Other European cities will chip away at London's lead over time."
Banks and investment banks alone are thought to have transferred nearly £800bn ($1.3trn) in assets out of Britain to the EU, which amounts to 10% of total banking assets in Britain. The think tank added that this estimate comes from only a small proportion of firms that have already reported what they are moving.
A 10% shift in banking and finance activity would cut UK tax receipts by about 1%, the report added.
"This shift will chip away at London's position as the dominant financial centres in Europe; increase cost, complexity and risk in European financial services; reduce the UK's influence in the banking and finance industry at a European and global level; and hit tax receipts and exports in financial services."
New Financial say this has resulted in 5,000 expected staff moves or local hires and that figure is expected to rise in coming years.
This falls in line with other reports that have recently scaled back estimates over jobs lost to Brexit. Investment bank Nomura said in a major Brexit note sent to clients: "The largest investment banks continue to decrease the amount of projected employee relocations."
In total, Nomura said it now expects 10,000 UK financial services jobs to be at risk of relocation due to Brexit.