|
|
Brexit-related activity within the UK financial services market – covering the relocation of staff and/or operations, the establishment of new EU hubs or offices, and the flow of assets to Europe – has remained muted over 2021.
According to the latest data from the EY Financial Services Brexit Tracker, since the UK’s official departure from the EU and the onset of the pandemic in early 2020, there has been a significant fall in announcements of operational moves.
Between January 2020 and December 2021, the number of financial services firms that have publicly stated they have moved or plan to move some UK operations and/or staff to Europe rose just three percentage points from 41% to 44% (from 92 to 97 out of 222 companies). This compares to the period in the wake of the Referendum, when announcements rose steadily from 18% in December 2016 to 41% in January 2020 (39 to 92 companies out of 222).
A number of the largest investment banks located in the UK, which had initially projected higher numbers of staff moves to Europe in anticipation of losing access to the single market, have since revised down the number of roles they will relocate to the continent to serve the needs of clients. The total number of Brexit-related job relocations from the UK to Europe has subsequently fallen to just under 7,400, down from 7,600 in December 2020.
The number of new hires across Europe and the UK since the Referendum which have been publicly linked to Brexit stands at just over 5,000, with around 2,800 new jobs created on the continent and 2,200 in the UK.
“It’s been nearly a year since the UK officially left the European Union, but the financial sector is still working through the hangover of Brexit.
“While the majority of operational moves were made well ahead of the 2020 Brexit deadline – and before the pandemic – travel restrictions over the last two years have challenged the practicalities of relocation. 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.
“For many financial services firms, we are still far from being fully ‘post-Brexit’. The Memorandum of Understanding for the sector remains unsigned, and there is not yet a definitive outcome on equivalence. While the EU has proposed an extension to temporary equivalence for UK-based clearing beyond June 2022, it is uncertain how long this will be for. And, although the EU has taken a pragmatic stance so far, there is no doubt that it plans to build up its long-term strategic capabilities. With such ongoing uncertainty, the risk of fragmented markets remains, which is inefficient, costly for all participants, and could ultimately harm the global competitiveness of both markets.”