Unless the financial services passporting rules are resolved in the UK’s favour, many large financial services businesses are likely to relocate to within the EU, a global law firm has predicted.
Passporting rules mean that, subject to its fulfilment of conditions under the relevant single market directive, a firm authorised in a European Economic Area (EEA) state is entitled to carry on permitted activities in any other EEA state.
Nick Elwell-Sutton, partner at law firm Clyde & Co, said while in the immediate short term nothing changes – it is business as usual – large financial services providers will now be looking at whether they need to move out of the UK.
He added: “Employers will need to consider how they will be affected once the exit actually occurs.
“Unless the financial services passporting rules are resolved in the UK’s favour, then many large financial services businesses are likely to relocate to within the EU, meaning large scale redundancies would be highly probable.”
James Coiley, finance partner at law firm Ashurst, said in the longer term, Brexit has the potential to affect the strategy and footprint of many financial services firms.
He added that firms would need to fight their corner with legislators and regulators in a bid to ensure that they can continue to access markets in their current form, failing which, they need to be prepared from now to respond to events as they unfold through the political process.