Brexit: Is London’s financial services sector at risk?
The referendum was of course a difficult period for UK businesses, with some implementing contingency plans almost immediately. But in recent news, concerns have been rising as big players, including the likes of Bank of America, are preparing to move hubs. It’s said the bank has selected Dublin as its new EU headquarters and has also repositioned its research analysts from London to Paris.
Fears of Brexit making it particularly difficult for UK based businesses to trade directly with EU clients, is forcing large corporations to consider relocating and reviewing their existing operating models. However, Andrew Pilgrim, Financial Services Associate Partner at EY stated his confidence that London will “continue as Europe’s major and only full service financial centre”.
The Financial Times revealed that the largest 15 international banks based in London would plan to move only 6% of their total workforce initially, largely to minimise staff disruption, but also because there’s still the possibility of access to the EU market following the deal.
Interestingly, a whitepaper published earlier this year by Mark Boleat, expressed his belief that while changes are inevitable following the expected hit to the sector as a whole, “Brexit will not destroy the UK’s financial services sector”, he claimed. He then went on to say that “the industry will adapt as it always has done – but it will probably lead to a smaller proportion of the total European market being based in London and the UK”.
Later in the whitepaper, he lists some insightful statistics centred around the size of the Financial Services sector to the UK economy. Touching on the analysis of the possible implications of Brexit on the industry, he looks at the findings from PwC. The report claims that the impact of Brexit will hit the financial services sector harder than the economy in general – with job losses alone reaching a possible 10,000 – 30,000 by 2030.
Fortunately, many of these concerns are speculative and as decisions are still yet to be made, contingency plans continue to be made.