The UK will have lost 10,500 finance jobs to other European cities by day one of Brexit, according to new research.
The number of City firms planning to shift jobs to the Continent has doubled since last year, professional services company EY said on Monday.
It tracked 222 City firms and found that almost a third of banks, brokers and asset managers had confirmed or said they are considering plans to move staff or open up new offices in centres such as Dublin, Amsterdam and Frankfurt.
However, the number of jobs estimated to be moving has dropped by 2,000 from a year ago, EY said. Many of the jobs set to go are front-office jobs rather than support functions.
The latest estimate is in line with that of Bank of England Deputy Governor Sam Woods who predicted 10,000 jobs would go by the time Britain officially departs the single market and customs union in March 2019. However a senior figure at the BoE believes around 75,000 jobs could be lost in the longer term because of Brexit, according to sources cited by the BBC.
Dublin and Frankfurt are the cities likely to see the largest benefit from Brexit relocations, EY said. A total of 26 firms have announced they will move operations to one of those two financial hubs.
“The extent of broader strategic restructurings and relocation plans will of course ultimately depend on the specifics of any long-term UK deal with the EU, but a drop in the volume of jobs moving will be welcome news for the City,” said Omar Ali, head of EY’s UK financial services team.
The moves would have a “significant” impact on smaller hubs on the Continent but would not dent London’s role as Europe’s primary financial centre, he said.
Mr Ali added that Friday’s breakthrough announcement of a Brexit agreement between the UK and the EU member states had “sent a wave of relief across the City”.
The two sides agreed to move on to the next phase of the Brexit talks.The agreement could pave the way for agreement on a transitional period as early as next year and the starting point for negotiations on future trade deals, both of which are seen as crucial for the future of the UK financial services industry.
UK-based financial institutions have lobbied hard for a transitional period, amid fears that they will not be able to serve their EU clients once Britain leaves the trading bloc. More firms are expected to confirm job moves from the UK if a transitional deal is not confirmed in early 2018.
A no-deal Brexit is widely seen as being potentially devastating for the UK’s important financial sector, which was worth £124bn to the UK economy in 2016, according to House of Commons figures.
The EU’s chief Brexit negotiator Michel Barnier made it clear last month that, when the UK leaves the single market, financial services firms based in Britain will lose their “passporting” rights.
“On financial services, UK voices suggest that Brexit does not mean Brexit. Brexit means Brexit, everywhere,” Mr Barnier told the Centre for European Reform last month.
The passport enables firms to sell their services across the EU. To continue selling to clients within the EU, as they do now, they would have to establish subsidiaries within the EU and apply for a local licence.
Alternatively they will have to hope they can rely on “regulatory equivalence”. This is the notion that if the UK financial regulator adopts the same regulatory standards as the pan-European financial regulator, the European regulator will continue to allow UK-based financial firms to operate as they do now across Europe.