Though financial services firms continue to move operations and staff out of the U.K. and into the European Union, the Brexit deal seems to have stemmed the flow.
Ernst & Young’s updated financial services Brexit tracker said 43% of the 222 financial services firms it tracks have moved or plan to move some U.K. operations and/or staff to Europe, as of Feb. 28. That takes the total number of Brexit-related job relocations to almost 7,600, vs. 7,500 as of Sept. 30.
The most popular destinations for staff moves, new European hubs or office relocations remain Dublin and Luxembourg.
Five wealth and money managers, 10 banks and nine insurance firms have transferred or said they will transfer assets out of the U.K. to Europe. EY estimated that almost £1.3 trillion ($1.8 trillion) of assets have moved or might move out of the U.K. to Europe. The estimate was made using details from those firms that have publicly declared such assets and moves. As of Sept. 30, that figure was an estimated £1.2 trillion.
Even as moves have been made, money managers and other financial services firms have also been calling for cooperation between the U.K. and EU, warning that Brexit continues to hit their profits.
More than one-quarter of firms, equating to 57 companies, have publicly said Brexit is impacting or will negatively hit their businesses, up from 49 in January 2020.
Since late December, when a Brexit deal was reached, 10 financial services firms — four of them wealth and asset managers operating in the U.K. with more than $10 trillion in assets under management — have publicly urged the government and regulators to ensure that the U.K. remains competitive and open for business.
“Financial services firms across Europe have a number of chapters still to write before they can close the book on Brexit,” said Omar Ali, Europe, the Middle East, India and Africa financial services managing partner for client services at EY, in a news release accompanying the update. “After the major hurdle of standing up new EU hubs, the days of significant swaths of asset and job relocation announcements appear to have passed and will likely be replaced by the slower yet ongoing movement of people and assets to Europe for compliance purposes.”
Financial services firms are now awaiting details of a memorandum of understanding on financial services along with the next round of Brexit discussions that will help to define the U.K. and EU’s future relationship.
“Such ongoing uncertainty poses the risk of fragmented markets, which is inefficient and costly for all financial services users and potentially damaging to the global competitiveness of both the U.K. and EU.,” Mr. Ali said. “Fragmentation of European financial services will serve to only benefit the U.S. and Asia.”
He added that “these challenges can be overcome if the right areas are prioritized — although passporting and equivalence debates command the headlines, there are arguably far more complex matters involving data, capital, skilled talent and frictional costs, that need to be settled.”
The tracker monitors public statements made by 222 financial services firms operating in the U.K.