With six months until the UK exits the EU, financial services (FS) firms are increasingly putting their contingency plans into action in a bid to ensure business continuity and minimise disruption for clients in the event of a no-deal Brexit.
As of 10th September 2018, 35% (77 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. This is an increase of 5% year on year. Firms are also being more specific about their plans, with an increasing number confirming at least one relocation destination in Europe. As of September 2018, 25% (56 out of 222) had done so, compared with 19% (42 out of 222) at the end of 2017.
Firms are now providing more granular detail on the types of roles being relocated from the City to the continent. Twenty of the largest UK-based FS firms so far have confirmed plans to relocate front office roles, comprising 57% of all job relocations tracked. Among the front office roles, the types of positions being relocated include sales, trading and distribution. Fifteen firms have announced plans to relocate or hire locally for middle or back office roles in Europe – middle office roles are predominantly legal and compliance, risk and oversight positions, and back office roles include clearing and settlements, human resources and IT.
Omar Ali, UK Financial Services Leader at EY, comments: “Firms are no longer merely talking about their plans. Across Europe, the wheels are in motion on relocation and hiring strategies as firms make their ability to serve clients from Day One of Brexit their number one priority.
“During the past quarter we have seen the number of companies that directly reference a hard or no-deal Brexit when discussing their plans publicly increase. We know some firms are coming up against roadblocks or delays in gaining license approvals from EU authorities, and unless this position shifts quickly, it increases the risks of a cliff edge to businesses and consumers alike. We are now approaching the wire on Brexit, and to avoid any heightened financial instability, regulatory approvals are urgently required from EU institutions.
“We expect many more firms to publicly announce their relocation plans before the end of the year as they increasingly receive their much anticipated regulatory approvals – our data is a snapshot of the biggest firms, and while many have made their plans public, many are still to vocalise their strategies.”