With all the speculation for nearly two-and-a-half years — when the vote for Britain to leave the European Union took place — about jobs being relocated to the EU, firms in the financial district of London (known as the ‘City’) have held back with just 630 finance roles having moved abroad, according to an in-depth recent survey.
A poll conducted by Reuters of 134 major financial firms found that a total of 5,800 could still be shifted abroad in the event of a “hard Brexit”, but that a much feared “Brexodus” has so far failed to materialise.
The same survey conducted a year ago suggested 10,000 jobs would relocate in the event of a messy exit from the EU, suggesting that the financial services industry is now adapting its Brexit plans.
Prior to the 2016 referendum it was estimated that hundreds of thousands of jobs would leave the City.
However, while the data present a more optimistic view of the short-term effects of leaving the EU, top City figures warned that the risk of leaving without a deal still poses a major threat to the industry. Prime Minister Theresa May has reiterated that “no deal” is still an option after failing to agree compromises with other EU leaders last month at the Salzburg summit.
Brexit director for law firm DLA Piper, Paul Hardy, said securing a transition period by the end of the year will be crucial to stemming further job losses, with major banks and insurers already having contingency plans in place for a no-deal Brexit.
He said: “Once it’s confirmed that there will be no deal I think you’ll see a greater efflux of people to the EU.” The government has committed to a 21-month transition, although one FTSE 100 financial services director said a transition period of five years would be preferable.
City lobby groups said firms are still following negotiations in detail, and that a better deal for financial services could reduce the number of jobs which ultimately move out of London. “We have not seen a big Brexodus of financial services jobs materialise yet,” said Catherine McGuinness, policy chairman of the City of London Corporation.
“Firms are, however, watching closely to see how negotiations between the two sides progress. This will play an important role in determining whether we see more jobs move to the continent after Brexit.”
While estimates of the effects of Brexit have focused on the number of jobs to move from London to other EU financial centres, Miles Celic, chief executive at TheCItyUK, warned that a “bad Brexit outcome” could advantage financial centres in Asia and the US over Europe.
According to a report out a week ago from Big Four accountancy firm EY, several thousand jobs within Europe’s financial services sector have been created or are set to be created across Europe as a result of Brexit. Roughly 500 of the new Brexit-related jobs are based in London, with 38 UK financial services firms suggesting that they have hired or are currently hiring staff.
EY’s new Financial Services Brexit Tracker also found that since the referendum, 35 per cent of UK financial services firms have said that they are considering or have confirmed the relocation of staff or operations to Europe.
Front-office roles make up 57 per cent of job relocations from the UK, while middle-and-back-office roles make up 23 per cent and 20 per cent respectively.
These figures which come despite the Reuters poll (mentioned above), quell concerns of an exodus feared by banks in the aftermath of the referendum result. UK Financial services leader at EY, Omar Ali, said: “During the past quarter we have seen the number of companies that directly reference a hard or no-deal Brexit when discussing their plans publicly increase.
“We know some firms are coming up against roadblocks or delays in gaining licence approvals from EU authorities, and unless this position shifts quickly, it increases the risks of a cliff edge to businesses and consumers alike.”
He added that “although progress by firms is broadly positive, we are far from out of the woods, and in case of a cliff edge, there is still much work to be done to be ready for day one of Brexit.” There is a summit of EU leaders this week followed by another next month by which there should be further clarity on the terms of UK’s exit.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
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