Brexit may not have happened yet — but damage it is causing to the UK's biggest industry already has.
EY, the professional services and consulting firm, says that banks and other financial companies have already shifted at least £800 billion — that is $1trillion — of assets out of the UK and into the European Union because of Brexit
It says the figure represents roughly 10% of the total assets of the UK banking sector, and was a "conservative estimate" because some banks have not yet revealed their contingency plans.
"In the face of an increasingly uncertain outlook over the UK's relationship with the EU, financial services firms have continued to relocate staff and assets away from London to Europe, in a bid to protect their clients and investors from the impact of any Brexit outcome" EY comments.
As of 30 November 2018, 36% (80 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 — increasing from 31% (68/222) over the last twelve months. For universal and investment banks, wealth and asset managers and the insurance sector, that number jumps to 48% of firms (68 out of 143).
In aggregate, 30% (67 out of 222) of firms monitored by the Brexit Tracker have now confirmed at least one location in Europe to where they are moving, considering moving, or adding staff and/or operations, up from 25% last quarter. Dublin attracted six and Paris attracted five more FS companies from September 2018 to the end of November 2018.
No choice but to plan for no deal
Omar Ali, UK Financial Services Leader at EY, comments: "In anticipation of the Parliamentary vote in January, the City will be watching closely to see if the proposed Brexit deal will be accepted or whether it's back to the drawing board for the Government. As things stand, and per regulatory expectations, financial services firms have no choice but to continue preparing on the basis of a "no deal" scenario.
"The City is further ahead in implementing its Brexit contingency plans than many other sectors and our numbers only reflect the moves that have been announced publicly. We know that behind the scenes firms are continuing to plan for a "no deal" scenario. The closer we get to 29 March without a deal, the more assets will be transferred and headcount hired locally or relocated. Inevitably, the contingency plans are for Day 1 only, and in the event of "no deal" will represent the tip of the iceberg as longer-term plans will be more strategic and extensive than those publicly announced to date."
Full details of the EY report are here.