UK economy: $ 1.3 trillion and 7,000 finance jobs leave Britain due to Brexit
Banks and other financial firms are moving more assets and jobs out of the UK as the country moves towards Brexit.
UK financial services firms have announced plans to transfer Â£ 1 trillion ($ 1.3 trillion) to the European Union, according to consultancy firm EY. This is an increase from a previous estimate of Â£ 800 billion ($ 1,100 billion).
Many banks have opened new offices in Germany, France, Ireland and other EU countries to protect their regional activities after Brexit. This means that they must also move substantial assets there to satisfy EU regulators.
Other companies are moving assets to protect their customers against sharp market swings and sudden regulatory changes that could accompany the split between Britain and its largest trading partner.
The financial services sector represents around 12% of the UK economy and employs 2.2 million people.
EY has followed 222 of the largest financial services firms in the UK since the Brexit referendum in June 2016. He said there had been a “steady increase” in the number of companies announcing they were transferring money. Brexit employees, operations and assets.
The number of jobs that will be relocated outside the UK in the near future stands at 7,000, according to EY. He estimates it will cost Britain at least Â£ 600million ($ 794million) in lost taxes.
EY said its estimate of assets transferred to Europe was “conservative.” But that roughly matches the expectations of the European Central Bank.
Andrea Enria, head of banking regulation at the ECB, told the Financial Times last week that the central bank expects around 1.2 trillion euros ($ 1.4 billion) in assets be transferred from Great Britain to the 19 EU countries that use the euro.
The ultimate magnitude of the exodus is likely to depend on the terms of the divorce and when it occurs.
Britain is due to leave the European Union in just nine days, but Prime Minister Theresa May has failed to secure the support of the British Parliament for the divorce deal she made with the rest of the European Union.
May is now asking the European Union to delay Brexit until June 30. If that doesn’t happen, the chances of the country breaking out of the bloc without a transitional deal on March 29 increase.
The Bank of England said the fallout from this scenario would be worse than the 2008 financial crisis. For financial institutions, a mess Brexit would be a nightmare, and they are taking action to limit the damage.
“As the day approaches, we must recognize that there are risks that are beyond the control of the industry,” said Omar Ali, UK financial services manager at EY.
“No financial services company can know for sure how a messy Brexit will impact them, their customers, people and supply chains or, more broadly, the UK economy.”