It’s possible that by the time you read this, Article 50 has been triggered and Britain has begun the process of leaving the EU. Brexit has a huge number of implications for the rest of the EU – redrafting trade agreements, new immigration rules and laws, and most pertinently for recruiters and employers; the potential movement of jobs from the UK.
In Financial Services, that focus will be even sharper, with the City of London likely to see the most change.
The problem of Brexit for financial services in the UK
- The EU is a single market, unlike the US where you need authorisation from each state you may want to sell insurance, in the EU you get passporting rights to sell financial services to other EU countries. Passporting rights will go once the UK leaves the EU.
- A recent survey by firm Gowling WLG highlighted that beverage, life sciences and financial services are most likely to consider relocating post Brexit.
- Claus Vistesen, chief Eurozone economist, expects banks to downsize as a result of Brexit.
On top of the theory and the forecasting, we are already hearing what the plans of many financial services firms are:
- Goldman Sachs has recently suspended plans to move key operations from the US to London because of the uncertainty created by a vote to leave the UK.
- UBS has announced up to 1,000 jobs will move out of London potentially to Frankfurt or to Madrid and HSBC has also touted 1,000 jobs to move to Paris.
- Jamie Dimon the head of JP Morgan has highlighted that up to 4000 jobs could be at risk in the UK.
So where will these jobs go?
A Brussels-based think tank highlighted that a staggering one-fifth of wholesale financial activity could shift to Ireland after Brexit. Currently 35% of London wholesale banking relates to clients in one of the other 27 EU states. However it is not just the banking jobs at risk, there are other key professional services jobs which relate to financial services and rely on the banking sector in London. No one country will benefit exclusively from the exodus of jobs from London but Ireland will be at the forefront.
The expected relocation options are:
- Frankfurt which is already somewhat of a financial hub however it has a relatively unexciting reputation as a city.
- Madrid gives greater access to Latin American economies however the lack of an English speaking workforce is a big negative.
- Paris is an attractive large city for employees, however, quite stringent regulations and labour laws are not in its favour.
- Dublin offers English speaking locals and flexible work relative to mainland Europe, but it does need to sort out some of the infrastructure issues around property and transport.
There is an argument that many UK Financial Services firms will look to open a small office in Dublin and leave 95% of the business in London – so more a regulatory move than a wholesale one – but that will be one for the regulator and may not work.
The benefits of Ireland
Martin Shanahan, CEO of the IDA, has highlighted that there has been a spike in inquiries since the Brexit vote. Ireland is particularly attractive to Financial Services as we are English speaking, have access to the EU market, have a common law system, and offer close proximity to the U.K.
Ireland’s purported challenge is dealing with the perceived talent shortage, however, if we look at the technology and life sciences sectors, it is clear Ireland has always been able to attract the necessary talent. Having nine of the top ten tech and pharma companies in Ireland is testament to the home-grown talent and the ability to attract highly skilled employees to Ireland.
Cpl is already seeing a huge amount of inquiries from candidates wanting to work in Financial Services in Ireland. We believe that Ireland is ripe to take advantage of the Brexit challenges facing the UK and build a stronger financial services hub In Ireland with our great talent, flexible labour laws, and great track record for companies relocating successfully.