The UK is leaving Europe.
More than 17 million people voted last week for the country to leave the European Union, winning a referendum, triggering the resignation of the country’s prime minister, and a downgrade of its credit rating.
Oh, and England’s soccer team got knocked out of the European Championships.
There is still much to be decided, but it’s clear that financial firms are not hanging around to wait and see how the situation plays out from here.
The race for financial firms to move staff from London has started.
“US global banks are likely to start strategically implementing parts of their contingency plans rather than wait for trade and service arrangements to be agreed,” ratings agency Fitch said in a note Tuesday.
To recap, here’s a handy guide from London-based think tank New Financial on what banks have said publicly about the movement of staff:
This isn’t going to be a sudden exodus, but is instead likely to be a slow, gradual movement of staff from London to Dublin, Paris and Frankfurt.
It isn’t just a question of whether staff move from London to another financial center, either. New jobs are less likely to be created in London. New Financial said in a report:
“During the negotiations market participants will be unwilling to invest in their operations in the UK until they have clarity on the nature of the UK’s future relationship with the EU, and we could see a gradual migration of staff and operations out of the UK.”
M&G Investments, the fund arm of insurer Prudential, is looking at expanding its operations in Dublin, according to Reuters. The proposed merger between the London Stock Exchange and Deutsche Boerse, which would have seen the combined group based in London, now looks on shaky ground.
Germany’s financial regulator has also said that London will no longer be the center of euro-denominated trading.
All of this adds up to a significant blow to London’s standing as a financial centre, and to the UK economy.
The report from New Financial said:
“Talk of an exodus from the UK may be overplayed, but banks and asset managers will move as many staff as they feel is necessary to ensure business continuity. This could quickly run into the tens of thousands. The upper estimates suggest as many as 100,000 jobs could be lost in the UK, but we believe somewhere between 30,000 and 50,000 is more realistic.”
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