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

Emma Barnett quizzes Daniel Kawczynski on whether free trade is possible under Gatt 24 in a no-deal Brexit

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.

“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.”

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in