A new report has found the hit to the City of London from Brexit so far has been worse than expected, with financial institutions moving £900bn abroad.
Dublin has been the biggest winner according to a study which found 275 banking and finance firms have moved business abroad.
After rumours that is was to be cancelled again, Tuesday’s second meaningful vote in the Commons on Theresa May’s Brexit deal will go ahead as planned confirmed Brexit Minister Robin Walker.
He told MPs the government will be issuing the wording of the motion and they would be “fully informed on the government’s legal analysis” of whether Theresa May has won any concessions from other EU states on the backstop arrangements to stop a hard border in Ireland.
With Theresa May likely to be humiliated again seeking further concessions in Strasbourg today and in tomorrow’s vote, it appears city institutions have been voting with their feet, moving operations abroad.
According to the Wall Street Journal today reporting the cost of Brexit turmoil: “There is one certainty in Brexit: London’s pre-eminent role in global finance has been diminished.”
In a report that says it is the “most comprehensive analysis yet of the impact of Brexit on the City and the wider banking and finance industry,” a study by thinktank New Financial found over 250 firms in banking and finance have moved or are moving business, staff, assets or legal entities away from the UK to the EU.
Worryingly, these numbers are set to increase significantly in the near future.
“These moves are the inevitable consequence of Brexit. The political uncertainty since the referendum and failure to reach a deal has forced firms to prepare for the worst and put their contingency plans into action,” says the report. Much of the damage has already been done, it warns, adding: “this shift will chip away at London’s position as the dominant financial centres in Europe.”
The report found that:
* Dublin is by far the biggest beneficiary with 100 relocations, well ahead of Luxembourg (60), Paris (41), Frankfurt (40) and Amsterdam (32).
* The post-Brexit landscape is much more ‘multipolar’ than before: more than 40 firms are moving staff or business to more than one financial centre in the EU.
* The shift in underlying business is more significant than headlines about the number of staff: our conservative estimates shows that banks and investment banks are moving around £800bn in assets; asset managers have so far transferred more than £65bn in funds; and insurance companies have so far moved £35bn in assets.
* There is a wide range in how different sectors have responded: for example, nearly half of asset managers, hedge funds and private equity firms in our sample have chosen Dublin, while nearly 90% of firms moving to Frankfurt are banks or investment banks.
“Business will continue to leak from London to the EU, with more activity being booked through local subsidiaries,” William Wright, founder and managing director of New Financial told the BBC.
The report did find some good news in that the contingency plans have been drawn up between UK and EU regulators for whatever eventuality occurs when the UK leaves the EU.
But, it warns, the bad news is that the impact of Brexit is bigger than many expected, with more job losses and losses of tax revenue and financial services to other EU countries, and potentially more to come when firms see how things pan out.