Brexit Britain is good news. For Brexit Brussels.
Lloyds of London looks set to become Lloyds of London and Brussels with one in six staff of one of the world’s biggest insurance markets moving to Belgium to secure a post-Brexit foothold in Europe.
The announcement will be a major embarrassment for sections of the press cheering this morning what Theresa May called an opportunity “to shape a stronger future for Britain.” The humiliating reality check comes just one day after Theresa May set out her vision of Britain leaving the European Union and the single European market in her letter to President of the European Council Donald Tusk triggering Article 50 – the negotiations for Britain leaving the EU.
The UK insurance and long term savings industry is the third largest in the world. It plays an essential part in the UK’s economic strength, managing investments of £1.9 trillion (equivalent to 25% of the UK’s total net worth) and paying nearly £12bn in taxes to the Government. So if other insurers follow suit for access to global markets that London may lose outside the European Union and Single Market, it is a real worry for UK prosperity.
Lloyds of London is an insurance market rather than a company, governed by the Lloyd’s Act of 1871 and subsequent acts of parliament. Lloyds was originally founded by Edward Lloyd in 1688 in a coffee house in Tower Street, in the City of London, and in 2015, Lloyds of London wrote £26.69 billion of gross premiums.
Lloyd’s is expected to move up to 100 jobs initially to Brussels from London, where it employs 600 of its global workforce of 900. Chairman John Nelson, told the Press Association last week that there had been “a lot of enthusiasm from a number of EU countries for Lloyd’s to come to their country”.
He explained that Lloyd’s had no choice to ensure it could continue to serve its European clients which account for 11% of its premiums – or £3billion a year. Insurance giant AIG last month also said it would have to set up a subsidiary in Luxembourg to serve European clients after Brexit.
As The London Economic reported earlier this year, in January Frankfurt and Paris were already beginning to lure “Brefugees” from London’s financial sector due to the looming Brexit. – Just days after HSBC warned it would have to move 1,000 jobs to Paris when Brexit “becomes effective” in a potentially damaging first blow to London’s status as Europe’s main financial centre. When their annual salary and bonus are combined, traders and investors earn an average of €116,996.06 per year. Collectively, those 13,200 workers earn almost €1.6 billion – a huge opportunity to the French and German economies in terms of spending money and tax revenue.
Goldman Sachs is set to move hundreds of its 6,000 London staff to Frankfurt and Paris. Other banks are still weighing up their options, and JP Morgan have warned that as many as 4,000 of their UK staff may be relocated to Europe to continue to have access to the European market.