UK will lose £800 billion in financial assets because of Brexit, report estimates

A report by the New Financial Group released today has identified 275 banking and finance firms that have moved or are in the process of moving staff or assets away from UK jurisdictions into European Union countries.

It was found that 250 firms have chosen a specific “post-Brexit hub” for business to the European Union, and 210 are setting up new corporate and legal entities in the European Union to manage business into the Nation Block.

Estimates have predicted that investment firms and banks will relocate around £800 billion in assets, and a further £65 billion in direct funds, to financial centres outside the United Kingdom either during or after a Brexit deal has been finalised and enacted.

The New Financial Group has presented a vastly different overview of the financial landscape originally predicted in past reports, with more than 40 firms moving assets to more than one city within the EU.

The report has also highlighted the top 5 EU cities benefiting from the relocation through added business traffic, with Dublin being seeing the largest economic benefits with over 100 firms relocating assets into the city- around 30% of all the asset migration identified by the New Financial Group.

This is followed by several mainland European cities including Luxembourg, Paris, Frankfurt, and Amsterdam, all seeing at least 30 firms relocating assets or staff to each city.

The report has also shown different migratory patterns for different financial sectors, with the majority of hedge funds and private equity firms moving to Dublin, and almost 90% of the assets being moved to Frankfurt are from investment banks.  

The predictions outlined in the report have also been theorised to only increase in the future as the deadline for Brexit draws closer. Local regulators within the European Union may require firms to increase local operations in European financial centres following the United Kingdom’s formal exit from the Union, and as the final Brexit deal changes more businesses may be required to move assets into European Union jurisdiction to keep unrestricted access to the free market.

In the financial banking industry, the majority of the damage incurred from Brexit occurred between the immediate economic fallout from the aftermath of the Brexit Referendum in 2016 and last year, when it was realised that the final Brexit deal would put the United Kingdom at a significant economic disadvantage on the international stage in the field of investment banking security. Many investment firms have already pulled out the majority of their assets where possible into more stable markets as economic uncertainty becomes more prominent in British finance. It would be an accurate prediction to estimate that firms will not relocate back into the United Kingdom until the economic uncertainty and fallout from the formal Brexit process due to begin later this month has settled and British markets have regained a relative state of consistency. Whether this will take a few years, or several decades, is something as of yet to be predicted.

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