EU financial companies appear uninterested in staying in the UK post-Brexit, as only half of European firms who had temporary licenses to operate in London have applied for full authorisation, it has emerged.
It comes as EU firms were given the temporary licenses immediately after Brexit by the Financial Conduct Authority, to encourage them to continue their activity during final negotiations.
But according to Financial News findings, only half of the licence-holders applied for full authorisation since then, suggesting firms are widely uninterested in staying in the UK.
The UK set to have ‘less reach in future’
Although financial watchdog FCA contacted dozens of firms over the summer, applications did not increase according to City AM.
When the window closed on 30 September, 33 out of the 72 companies expected to apply did not do so, amounting to 46 per cent of all firms Britain was counting on.
Niki Beattie, founder and CEO of Market Structure Partners, told Financial News that “you could interpret this as the UK having less reach in future”.
The EU firms losing interest in the UK are the latest blow to Britain’s financial sector, – last week, it emerged that the only thing keeping bankers in London from moving to the EU post-Brexit were the government’s lockdowns and Covid travel restrictions.
Despite the obstacles, almost half of 222 financial services institutions in the City and Canary Wharf have moved or are planning to move their London staff and services out of Britain and to Amsterdam, Milan, Frankfurt or Paris – a three per cent increase compared to last year.
Financial firms prevented to move to EU by UK’s Covid restrictions
And new hires directly related to Brexit have reached over 5,000 roles, of which 2,800 were created in the EU, compared to 2,200 in Britain, EY’s Brexit Tracker survey results showed.
“Travel restrictions over the last two years have challenged the practicalities of relocation,” said Omar Ali, EY head of financial services for Europe, the Middle East, India and Africa.
He added: “Depending on the trajectory of the Omicron variant and its impact on international travel in the short term, delayed moves should pick up over the coming year, not least due to ongoing pressure from EU regulators.”
Ali also highlighted that warnings that London’s financial services may lose around 30,000 banking and finserv jobs are yet to become reality because the effects of Brexit are still awaiting to be felt.
In October, the UK’s financial sector urged the government to relax visa rules for workers from abroad who want to work in Britain for up to six months to help the country maintain international competitiveness.
According to a report by industry experts TheCityUK, City of London Corporation and EY, a “hybrid” short-term visa would allow workers to come without the bureaucracy involved in a typical visa process.