Banks and insurers have moved almost £1tn out of Britain and shifted thousands of jobs to Europe due to Brexit, according to a "sobering" new report on the impact of leaving the EU on Britain's financial services sector.
More than 440 financial services firms have shifted jobs to the EU as a result of Brexit, according to a new report from think tank New Financial, and firms have moved £900bn ($1.2tn) to the EU. The think tank said more jobs and assets were likely to leave Britain in the coming months and years.
The think tank said its report was the most comprehensive measure of the impact of Brexit on the City of London so far.
The study, published on Friday, identified over 440 companies that "have moved or are moving part of their business, staff, assets or legal entities from the UK to the EU." New Financial estimated that around 7,400 staff have been shifted out of London since the 2016 Brexit vote. That is in-line with EY's Brexit tracker, which last month estimated that 7.600 roles had been moved.
Dublin has been the biggest winner when it comes to job re-locations, followed by Paris. Luxembourg, Frankfurt, and Amsterdam have also been popular re-location destinations. New Financial said this scattering of jobs across the EU had "wound the clock back by about 20 years."
"While this is higher than previous estimates, it underestimates the real picture – and the potential longer-term impact," the report's authors warned.
"The bigger issue is not jobs leaving the UK but new jobs in the EU being created in future that might otherwise have been created in the UK."
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New Financial estimated that £900bn ($1.2tn) in bank assets — roughly 10% of the UK banking system — has either been shifted to the EU or been earmarked to move.
New Financial said it expected move jobs and assets to shift to the continent as part of a "drip-feed of business and activity from the UK to the EU."
"As the EU takes a tougher line on the location of activity and individuals we expect these headline numbers to increase in future," the report said.
Earlier this month the chief executive of JPMorgan (JPM) said he may be forced to move all EU-facing jobs out of London as a result of "uncertainties" around regulation.
The trade deal struck between the UK and EU in December did not cover services and finance has been left in limbo as both sides continue negotiations over a potential supplementary deal.
EU officials have been pressuring finance firms in London to relocate jobs and assets to the EU now that Brexit has taken effect. This has alarmed the Bank of England, which has argued that Brussels is being too demanding.
New Financial said it believed the EU was unlikely to grant access to financial services firms based in Britain.
"Access is unlikely to be forthcoming, so it is perhaps better for the industry to take the damage from Brexit on the chin and focus instead on recalibrating the framework in the UK so that it is more tailored to the unique nature of the UK financial services industry," the report said.
New Financial called its findings "sobering". Financial services represents about 7% of the UK economy and represents 1.1m jobs.
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