Friday April 16, 2021
One trillion euros is moving to the EU
Financial firms are leaving London in droves
Most recently, Amsterdam ousted London as the largest stock market in Europe as a result of Brexit. How severe the consequences of leaving the EU actually weigh is only gradually becoming clear. In the meantime, many more companies are leaving than expected – with serious financial consequences.
According to a study, Brexit leads to an unexpectedly heavy bloodletting for the financial metropolis of London. More than 440 financial firms have moved their business from the British capital to continental Europe since the UK left the European Union (EU), like a new one Study by the New Financial think tank shows. That is significantly more than expected. “We assume that the actual number is much higher and that even more companies will relocate their activities in the future,” is the conclusion. “We are only at the end of the start of Brexit.”
The Irish capital Dublin, according to the study, will benefit most from the relocations. 135 companies have relocated their corporate headquarters there, followed by Paris, Luxembourg, Frankfurt and Amsterdam. Banks, insurance companies and fund service providers have so far pushed assets totaling a good 900 billion pounds, the equivalent of more than one trillion euros, to the countries of continental Europe.
“That’s about ten percent of the entire UK banking system,” the authors write. “Frankfurt will be the longer-term winner in terms of wealth reallocation. Paris, on the other hand, will be the biggest beneficiary in terms of jobs.”
Loss of EU rights
With Brexit, British financial service providers lost their so-called “passport” rights. This allowed them to conduct their business in the EU internal market without additional regulatory approvals. Therefore, British companies either have to meet the regulatory requirements of each individual EU member state or rely on the EU to judge the British regulatory framework as equivalent.
Most recently, London was ousted by Amsterdam as the largest stock market in Europe. “Since European investors were no longer able to trade shares on the London Stock Exchange without a financial services agreement between the UK and the EU, trading activities had to be relocated to an EU member state,” say experts. The development was inevitable.
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