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Investment from abroad in Britain’s financial-services firms fell 26 percent last year, EY said in a report released Monday. During the same period, Germany experienced a 64 percent increase, while the figure for France more than doubled. London still attracted more inward investment in financial services than any other EU city, but the gap with Paris, Frankfurt and Dublin is narrowing, EY said.
With talks between the U.K. and EU stalled since March, banks are rushing to establish new trading hubs elsewhere in the region. EU regulators have made it clear they expect banks to establish full-scale, standalone operations inside the trading bloc staffed by significant numbers, as soon as possible. The resignation of U.K. Brexit Secretary David Davis late Sunday in protest over Prime Minister Theresa May’s plans for a soft exit from the EU only adds to the uncertainty over the direction of government policy.
"U.K.-headquartered financial services firms need to ensure post-Brexit access to EU markets to safeguard the future of their business," Omar Ali, EY’s U.K. financial-services leader, said in the report. "The question is, will this be a temporary shift or the start of a more sustained trend?"
The U.K. financial sector attracted 78 FDI projects last year. That’s the highest number in Europe, but down from a record 106 in 2016, EY said in the report. Germany’s total increased to 64 projects in 2017 from 39 the previous year, while France registered 49 new projects, up from 22 in 2016. Luxembourg saw 17 projects, surging from just 2. [...]