Reuters recently ran a survey of companies who employ the most workers in international finance. The conclusion – as many as 10,000 finance jobs will be created or shift overseas if the UK is denied access to the single market.
The results came from 123 companies such as the biggest banks, insurers and asset managers, private equity firms and exchanges in Britain as they were asked for specific details of their plans so far in a case of a so called ‘hard Brexit.’
Close to 50% of these companies told Reuters they would have to move staff or restructure their businesses because of Brexit, which is due to take place in March 2019.
A third of companies said it would have no impact, and the remainder said they were undecided on their plans or declined to comment.
The number of jobs to be moved or created overseas was based on answers from 39 companies employing at least 350,000 people. About 1.1 million people work in Britain’s financial sector.
By far the most popular destination for the new roles, was Frankfurt the survey showed, with Paris a distant second.
The findings did suggest that, in the short term, London could keep its place as the EU’s No 1 financial centre but most companies surveyed saw bigger moves in store in a decade or more.
“If it is going to happen it won’t be in one big bang,” said a senior executive at one of Europe’s largest banks, which took part in the survey. “There will be a slow drain of jobs from London over a number of years.”
In response to suggestions that some companies could be delaying decisions in the hope of a ‘soft Brexit,’ Andrew Gray, global head of Brexit for financial services at PwC, said, “They would like to think there is going to be a mutually easy way of dealing with financial services across the EU-UK border, so firms are finding it hard to land on precise plans.”
The Governor of the Bank of England, Mark Carney, has also specifically warned companies against that approach, saying it’s important to start planning now.
London’s future as Europe’s premier financial hub is one of the biggest issues in Brexit talks because the sector is the UK’s biggest source of corporate tax revenue.
And the financial sector is not alone in its concerns over Brexit. The UK tech sector also has worries over creating a “hostile place” for European technology experts to work post Brexit.
Jimmy Wales, co-founder of Wikipedia has warned ministers over his concerns that other continental capitals could offer more attractive terms for developers and tech companies once Britain leaves the EU.
Speaking ahead of next month’s London Tech week, he said he worries that financial firms are already looking to locate elsewhere.
He said, “London is a very important city in the global tech scene, but I worry about the future, about Brexit and what that’s going to bring for London’s tech community in particular.
“I worry that if we become a hostile place for immigration from Europe, then that’s not good. We depend on talented people thinking London is a great place to move to and live, and have a great career.
“But London’s not alone — it has competition as a city. Berlin is super-cool and has a thriving tech scene.
“In the past, we could rely on English as a language and London — as a financial powerhouse — as an anchor with a strength in fintech.
“So, it worries me when I see big banks investing more in Frankfurt.
“I’m a pathological optimist… but what’s kind of alarming about this is the depth of the constitutional change.
“The magnitude of this is so large it’s hard for people to get their heads around it.”
Commenting on the government’s attempt to regulate social media firms, he said “I’m sceptical because politicians generally don’t understand the internet very well. So, they attempt to regulate something they don’t understand and often don’t solve the problem, but just create other problems. At the same time, some of the problems they aren’t even touching are big and international: identity theft and information security.
“There’s so little co-operation between different jurisdictions and it’s going to take a long time to figure that out.”
Culture Secretary Matt Hancock has said tech giants will face greater regulation following claims that details of 50 million Facebook users had been harvested for political use.
Senior executives in London said that the true impact of Brexit will only become clear in ten or twenty years because most firms are implementing a two-stage contingency plan.
The first phase will involve relatively small numbers to make sure the requisite licenses and infrastructure are in place. The next will require longer-term thinking about what the companies’ European business will look like.
The final impact will also depend on the details of the Brexit deal, Europe’s economic growth and whether Frankfurt and Dublin prove to be successful alternatives to London.