Dublin remains most favoured Brexit alternative but other European cities gain ground as Brexit chaos forces financial firms out

Edinburgh-based financial heavyweights Baillie Gifford and Standard Life Aberdeen both have longstanding plans in place to relocate the base for their European operations to the Irish Capital. Both

EY found German finanicial centre Frankfurt is the second most favoured alternative for UK firms and has attracted 15 companies, including three banks since June.

But with just six months until the UK exits the EU and the prospect of a no-deal Brexit seeming to be becoming more likely, other cities are now gaining traction; 14 companies have confirmed they will be moving staff and/or operations to Luxembourg (with three asset managers confirming this over the past three months), and 10 firms remain set on Paris.

Milan and Madrid are also rising in popularity as hubs for major investment banks, with three and two banks respectively confirming these locations in the last quarter.

EY found that financial services firms are increasingly putting their contingency plans into action in a bid to ensure business continuity and minimise disruption for clients.

As of 10th September 2018, 35 per cent (77 out of 222) of the companies monitored in EY’s Financial Services Brexit Tracker had publicly confirmed, or stated their intentions, to move some of their operations and/or staff from the UK to Europe.

This is an increase of 5 per cent year-on-year. Firms are also being more specific about their plans, with an increasing number confirming at least one relocation destination in Europe.

As of September 2018, 25 per cent (56 out of 222) had done so, compared with 19 per cent (42 out of 222) at the end of 2017.

Firms are now providing more granular detail on the types of roles being relocated from the City to the continent.

Twenty of the largest UK-based FS firms so far have confirmed plans to relocate front office roles, comprising 57 per cent of all job relocations tracked.

Among the front office roles, the types of positions being relocated include sales, trading and distribution.

Fifteen firms have announced plans to relocate or hire locally for middle or back office roles in Europe – middle office roles are predominantly legal and compliance, risk and oversight positions, and back office roles include clearing and settlements, human resources and IT.

Since the Referendum, EY’s Financial Services Brexit Tracker estimates that over 2,500 new jobs have been created or are in the process of being created by FS firms across Europe for Brexit-related work. Thirty-eight firms have suggested that they have or are currently hiring staff. Around 500 of these jobs are new roles created in London.

Separately, across the firms tracked, the number of UK staff that could potentially be relocated to Europe to continue work from Day One has increased marginally versus the last quarter, rising to just under 10,500 people.

Omar Ali, UK Financial Services Leader at EY, said: “Firms are no longer merely talking about their plans. Across Europe, the wheels are in motion on relocation and hiring strategies as firms make their ability to serve clients from Day One of Brexit their number one priority.

“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 license approvals from EU authorities, and unless this position shifts quickly, it increases the risks of a cliff edge to businesses and consumers alike. We are now approaching the wire on Brexit, and to avoid any heightened financial instability, regulatory approvals are urgently required from EU institutions.

“We expect many more firms to publicly announce their relocation plans before the end of the year as they increasingly receive their much anticipated regulatory approvals - our data is a snapshot of the biggest firms, and while many have made their plans public, many are still to vocalise their strategies.”