Firms in the financial district of London (known as the ‘City’), in particular, have defied expectations about how many staff would relocate to the European Union or indeed, where necessary within Europe over Brexit, according to EY’s (Ernst Young) latest tracker. The consultancy’s latest tally shows the pace of an initial flight from London has slowed.
As of March 2021, firms had publicly announced some 7,600 Brexit related job relocations. This has now fallen to 7,000, EY says. The slowing figures will be read as a positive sign by City watchers, who initially feared a significant brain drain after EY tracked some 12,500 potential job moves in the months following the results of the referendum held in 2016.
Investment banks were particularly keen to prepare for a possible hard Brexit, as the like of JPMorgan, Deutsche Bank and Standard Chartered mulled over moving thousands of jobs to the continent to head off a worst-case scenario where they lost market access. Ireland was considered as one of the popular places in the relocation plans with the country’s language, among other things, seen as an advantage.
EY Emea financial services leader, Omar Ali, says: “Most firms finalised the majority of essential operational moves well ahead of the 2020 Brexit deadline and were able to serve clients in the UK and EU without undue disruption.”
EY says that the number of new hires that have been publicly linked to Brexit since the referendum across Europe (2,900) and the UK (2,500) has now risen to 5,400, from just over 5,000 between October and December 2021. The increase has predominantly been driven by an uptick in the number of staff hired in London, it said.
The figures come as the market continues to await the result of a ‘desk mapping’ exercise by the European Central Bank (ECB), which was due to finish in the first quarter of this year. The ECB is reviewing how international firms are allocating staff and resources across the bloc, in a bid to weed out banks running empty shell companies on the continent while the bulk of their business remains in the UK.
While European authorities have warned firms not to skirt post-Brexit access rules through practices such as ‘brass plating’, ‘reverse solicitation’ or ‘back-to-back trading’, the extent of breaches appears to be little understood, with public action against offenders yet to come to light. While the UK has pressed ahead with concrete plans to diverge on regulations such as Solvency 11, uncertainty remains over other key battlegrounds such as clearing.
While (job relocation) numbers have now stabilised, there will remain a degree of fluidity for some years to come, and staff and operational moves across European financial markets will continue as firms navigate ongoing geopolitical uncertainty, post-pandemic dynamics and regulatory requirements,” Ali said.
He further said that while cross-border access remains a priority for both UK and EU firms, “overall, Brexit related decisions are increasingly becoming integrated into businesses’ broader operational considerations” in line with their wider growth and transformation strategies.
The UK government is currently attempting to push through a new approach to how the City is regulated in the wake of Brexit. It is asking watchdogs such as the Financial Conducts Authority and Prudential Regulation Authority to focus their efforts on improving London’s international standing in addition to their existing consumer protection and market stability remits.
After a protracted search for a head to lead its new Brexit Opportunities Unit, which had narrowed down to five candidates by last October, the UK government has yet to announce who has secured the position.
Andy Jalil
andyjalil@aol.com
The writer is our foreign correspondent based in the UK
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