Muted Brexit moves in 2021 shows work is 'largely complete'

Muted Brexit moves in 2021 shows work is 'largely complete'

The number of staff, companies and assets being moved abroad due to Brexit during 2021 shows this work is "largely complete".

According to EY's Financial Services Brexit Tracker, the number of financial services firms which have publicly stated they have moved or plan to move some UK operations and/or staff to Europe rose by just three percentage points from 41 per cent to 44 per cent - from 92 to 97 out of 222 companies.

A number of the largest UK investment banks have actually revised down the number of roles they will relocate to the continent, with this number falling to just under 7,400, down from 7,600 in December 2020.

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Miles Celic, chief executive of industry body TheCityUK, said, "Following the Brexit referendum result, firms worked extremely hard to ensure that whatever the final relationship between the UK and EU, they could continue to meet all regulatory obligations and serve customers and clients.

"The success of this work is demonstrated by the avoidance of any financial instability or system failures – a real concern in the early months following the referendum.

"EY’s Brexit tracker shows this work is now largely complete. It’s time to move the conversation beyond Brexit and focus on the long term competitive factors on which UK and wider European economic success will rest."

Since the referendum in 2016, 24 financial services firms have publicly declared they will transfer just over £1.3tn of UK assets to the EU, a figure which has remained broadly flat throughout 2021.

Omar Ali, EMEIA financial services leader at EY, said the pace of activity might speed up once travel becomes easier due to the roll out of vaccines and the end of travel restrictions due to the Covid-19 pandemic.

He said: "For many financial services firms, we are still far from being fully ‘post-Brexit’. The Memorandum of Understanding for the sector remains unsigned, and there is not yet a definitive outcome on equivalence.

"While the EU has proposed an extension to temporary equivalence for UK-based clearing beyond June 2022, it is uncertain how long this will be for. And, although the EU has taken a pragmatic stance so far, there is no doubt that it plans to build up its long-term strategic capabilities.

"With such ongoing uncertainty, the risk of fragmented markets remains, which is inefficient, costly for all participants, and could ultimately harm the global competitiveness of both markets."