A common phrase ‘Brexit Reality’ has been used to accompany the doom and gloom headlines surrounding Brexit, but in this case, the reality is that the UK will actually thrive.
LONDON – More than a thousand banks, asset managers, payments companies and insurers in the European Union plan to open offices in post-Brexit Britain so they can continue serving UK clients, regulatory consultancy Bovill said on Monday.FILE PHOTO: A person walks through the Canary Wharf financial district of London, Britain, December 7, 2018. REUTERS/Simon Dawson
The new offices and staff will help mitigate the loss of business going the other way as the current unfettered two-way direct access between Britain and the EU comes to an end in December following a Brexit transition period.
As a first step, the companies, who until now have been able to serve UK customers directly from their home base, have applied for temporary permission to operate in Britain after Jan. 31 when the UK leaves the bloc, Bovill said, using figures obtained from Britain’s Financial Conduct Authority.
“These figures clearly show that many firms see the UK as Europe’s premier financial services hub,” said Michael Johnson, a consultant at Bovill.
More than 300 financial firms in Britain have opened EU hubs to continue serving clients in the bloc after Brexit, according to a recent survey from New Financial think tank.
Consultants EY said on Monday that large UK-based firms had now implemented plans enabling them to continue operating in the EU after Brexit. It maintained its estimate that around 7,000 positions would be relocated from London to the continent and a further 2,400 jobs created and hired for locally at the new EU hubs.
Firms are now carefully watching negotiations on Britain’s future relationship with the EU, EY said.
Britain’s finance minister Sajid Javid told the Financial Times on Saturday that future EU access would be under the bloc’s “equivalence” system, a patchy and basic form of access used by the United States, Singapore and Japan.
“For many, equivalence would provide much-needed certainty, but it is a complex framework with over 40 provisions, which is not guaranteed long term, and means different things to different firms,” said Omar Ali, EY’s UK financial services leader.
Bovill said 228 firms from Ireland had applied for temporary permission to keep serving UK clients until they obtain full authorization for a new UK hub.
“In practical terms, these figures mean that European firms will be buying office space, hiring staff and engaging legal and professional advisers in the UK,” Bovill said.
Firms from France, Cyprus and Germany have applied for 170, 165 and 149 temporary permissions respectively, the consultancy said.
EY said banks will now have to decide whether having multiple hubs in the euro zone and Britain after Brexit makes economic and strategic sense or if some should be closed.