The great exodus did not take place. Four and a half years after the referendum of June 23, 2016 in favor of Brexit, the number of bankers who have left the City to settle in the European Union (EU) is imperceptible on a daily basis, but very real.
Posted Thursday 1er October, the latest barometer from EY, an audit firm that tracks decisions from 240 financial institutions, indicates that 7,500 jobs have been relocated to the EU since 2016, including 400 more in 2020. In addition, 2 800 recruitments made in the Union instead of in the United Kingdom. That is to say tens of thousands of jobs lost directly because of Brexit in the British financial sector.
“This barometer is an underestimation since it only follows a limited sample of companies”, nuance William Wright, director of New Financial, a think tank specializing in finance. He himself carried out a count in 2019 of all the companies that took measures following Brexit (relocations, opening of new branches, transfer of assets, etc.). He counted 330, a third more than the EY sample.
In France alone, 43 new licenses have been granted to financial companies to ensure the continuity of services after Brexit. To this must be added 31 license applications under examination, announced on Wednesday October 7, François Villeroy de Galhau, the governor of the Banque de France.
The wait-and-see policy reigns
This movement is just the beginning, says Wright. “Moving a job from London to Paris or Dublin is expensive and difficult. Companies therefore want to do the bare minimum. For them, it would be a shame to relocate only to finally realize that it was not necessary, for example if London and Brussels found an agreement. “
However, negotiations on future bilateral relations have still not been concluded. For the time being, a wait-and-see policy reigns. Whatever happens, from the 1er January 2021, the British will lose their “passport”, and their financial products can no longer be automatically sold in the EU. Nevertheless, they hope to obtain certain regulatory “equivalences”. For the City, this system is far from ideal: the Union grants them unilaterally, in 39 different areas, and can withdraw them overnight. However, it would be a lesser evil.
So far, the Union has shown itself to be intractable. The European Commission granted only one equivalency to the UK, on September 21, on a piece of technical, but important, financial plumbing: clearing houses. When a financial product is sold, these structures are responsible for ensuring that the transaction is actually carried out. In particular, they check that the buyer has the necessary money and that the seller is indeed the owner of the product he is selling. The UK clearing houses dominate the market today. LCH Limited, which is owned by the London Stock Exchange, deals 90% of Euro denominated interest rate derivatives.
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