General view of Canary Wharf financial district skyline as people play at sunset in Wanstead Flats in London, Sunday February 28, 2021. Photo: AP Photo / Alberto Pezzali
Banks and insurers have driven nearly £ 1bn ($ 1.4bn) out of the UK and moved thousands of jobs to Europe as a result of Brexit. This comes from a “sobering” new report on the impact of the EU’s exit on the UK financial services sector.
More than 440 financial services companies have relocated jobs to the EU as a result of Brexit, and companies have relocated £ 900 billion to the EU, according to a new report by the New Financial think tank. The think tank said more jobs and assets are likely to leave the UK in the coming months and years.
The think tank said its report was the most comprehensive measure yet of the impact of Brexit on the City of London.
The study, published on Friday, identified over 440 companies that “have or are relocating any part of their business, employees, assets or legal entity from the UK to the EU”. New Financial estimates that around 7,400 employees have been dismissed from London since the 2016 Brexit vote. This is in line with EY’s Brexit tracker, which estimated 7,600 roles were moved last month.
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Dublin was the biggest winner in job relocation, followed by Paris. Luxembourg, Frankfurt and Amsterdam were also popular relocation destinations. New Financial said this dispersion of jobs across the EU has “turned the clock back about 20 years”.
“While this is higher than previous estimates, it underestimates the real picture – and the possible longer-term effects,” warned the report’s authors.
“The bigger problem is not that jobs are leaving the UK, but that new jobs will be created in the EU in the future that might otherwise have been created in the UK.”
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New Financial estimates that £ 900 billion bank assets – about 10% of the UK banking system – are either being relocated to the EU or scheduled for relocation.
The story goes on
New Financial expected jobs and assets to be relocated to the continent as a “drop of business and activity from the UK to the EU”.
“As the EU takes a stricter line on the location of activities and individuals, we expect these headline numbers to increase in the future,” the report said.
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Earlier this month, the chief executive of JPMorgan (JPM) said he could potentially be forced to move all EU jobs out of London due to “uncertainties” about regulation.
The UK-EU trade deal signed in December did not cover services and finances remained in limbo as both sides continue negotiations on a possible supplementary deal.
EU officials have put pressure on financial firms in London to move jobs and assets to the EU after Brexit went into effect. This has alarmed the Bank of England, which has argued that Brussels is too demanding.
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New Financial said the EU is unlikely to give access to financial services companies based in the UK.
“Access is unlikely to be possible, so it may be better for the industry to bear the damage caused by Brexit and instead focus on recalibrating the UK framework to better cater to that Uniqueness of UK financial services tailored. ” Industry, “says the report.
New Financial called its results “sobering”. Financial services make up about 7% of the UK economy and represent 1.1 million jobs.
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