Brexit: £1 trillion of assets and 7,000 banking jobs moved from UK to EU so far, research finds

City of London firms also spent £4bn on contingency plans, legal advice and new offices in European financial centres, report finds

Brexit: £1 trillion of assets and 7,000 banking jobs moved from UK to EU so far, research finds 1

City financial firms have so far committed to move at least 7,000 jobs and £1 trillion of assets out of the UK to prepare for Brexit, with the true cost likely to be higher, research has found.

Brexit has also cost firms £4bn as they have moved staff, taken out legal advice and implemented contingency plans, accounting and consultancy firm EY found.

The sum includes £2.6bn to build up a presence in other financial centres such as Frankfurt, Dublin and Paris to ensure smooth operation of services after Brexit.

EY said that the true impact was likely to be greater because just 13 of the 222 firms it monitors have put a figure on the direct financial impact of Brexit.

Many companies in Britain’s lucrative financial services sector appear reluctant to make the final decision to move “until they absolutely have to”, EY said.

The drain of assets, jobs and capital has slowed in the last three months as businesses have awaited clarity following the postponement of Brexit from March to 31 October.

But financial services have also been hit by uncertainty in the wider economy, which has stopped companies investing, dampening demand for credit.

Omar Ali, UK financial services leader at EY, said he had seen some companies restarting their relocation programmes over the last few weeks and expected activity to pick up “markedly” over the course of summer as the new Brexit deadline looms.

Mr Ali said: “So far, only a small proportion of the largest, listed firms have put a number on potential costs, which means this number is likely to be a drop in the ocean as firms prepare to do business post-Brexit.

“The financial impact of Brexit is beginning to fall to the bottom line, and firms are now making a direct link between financial performance and the tangible commercial impacts of Brexit.

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“Capital deployed for supporting new non-UK headquarters is value which is not being returned to shareholders or reinvested in UK businesses. Over time some of this capital may flow back to the UK, but currently [there] is a net loss for our economy.”

Both candidates to become the next UK prime minister, Jeremy Hunt and Boris Johnson, have said they would take the country out of the EU without a deal if parliament did not vote through the withdrawal agreement in time.

That outcome is widely predicted to cause significant damage to Britain’s financial services sector.

In the event of a disorderly exit, UK financial service firms would lose their so-called passporting rights “overnight”, Mr Ali said.

Passporting allows companies regulated in one EU member state to sell their services across the trading bloc.

Provisions allowing trade with countries that have regulations deemed to be equivalent to the EU’s would need to be freshly negotiated – such arrangements would not be automatic. This would put UK firms at a disadvantage to “third countries”, such as the US, Singapore and Hong Kong.

Mr Ali added: “The timescales around moving on from a no deal also look challenging.

“Along with possible political fallout, the EU’s mechanisms for coming to new trading arrangements are complex, requiring unanimity and individual approvals from certain member states’ parliaments.

“All of this suggests further significant restructuring for firms in the aftermath of a no deal exit.”

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