The UK government says Brexit will harm the economy. A lot of damage has already been done.

Chris J Ratcliffe/Getty Images
  • Banks and financial firms that make up 6.5% of UK GDP have already taken precautionary measures to prep for Brexit, meaning a lot of damage is already done.
  • Banking is just the tip of the iceberg with many other industries also making irrevocable decisions

The UK Chancellor Philip Hammond today released official assessments showing that he UK economy will be hit under all likely Brexit outcomes.

But, the damage to the economy from Brexit is already afoot – so much so that the act of leaving the EU itself is, at this point, increasingly irrelevant.

Leaders of companies with UK operations haven’t been taking any chances. The mere whiff of uncertainty surrounding a soft, hard, no-deal or any other Brexit has been enough to send them packing. These moves won’t be undone, even if Brexit were somehow cancelled.

The impact on the City of London could be especially damaging – financial services, heavily concentrated in the capital, account for 6.5% of the UK’s GDP.

“I don’t believe Brexit can be a trigger for a financial crisis or a banking crisis,” Sergio Ermotti, CEO of Swiss investment firm UBS, told Bloomberg back in September. “But it could undermine investments, and trigger maybe a slowdown in the economy. That’s clear.”

Here’s a roundup of the financial exodus so far:

  • US bank giants Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup have moved 250 billion euros ($US283 billion) of balance-sheet assets to Frankfurt because of Brexit.
  • Bank of America is spending $US400 million to move staff and operations in anticipation of Brexit, and is trying to persuade London staff to move to Paris.
  • Barclays is seeking to transfer €250 billion ($US280.8 billion) of business to Dublin and is set to become Ireland’s biggest bank.
  • France’s BNP Paribas, Credit Agricole, and Societe Generale have opted to transfer 500 staff out of London to Paris.
  • UBS has chosen German financial center Frankfurt for its new EU headquarters.
  • Swiss peerCredit Suisse is moving 250 jobs to Germany, Madrid, and Luxembourg among other EU 27 countries as well as $US200 million from its market division to Germany.
  • Germany’s Deutsche Bank is also considering shifting large volumes of assets to Frankfurt as part of its Brexit plan.
  • HSBC, Europe’s biggest bank, has shifted ownership of many of its European subsidiaries from its London-based entity to its French unit.
  • Australia’s largest bank by assets, Commonwealth Bank of Australia, has set in motion plans to base around 50 staff in Amsterdam, and has applied for a banking licence in the country.
  • Other Australian lenders Macquarie, Westpac, and ANZ are also in talks to move operations to Dublin and continental Europe.
  • Europe’s biggest repo trading venue, called BrokerTec, is being moved to Amsterdam from London, meaning a $US240 billion a day repo business is leaving the UK.
  • More than 100 UK-based asset managers and funds have applied to the Irish central bank for authorization in Ireland.

The impact of these changes will see less tax revenue for the government, fewer jobs, and a dent in dealmaking, taking a shine off the City’s lustre.

And that’s just financial services.

Schaeffler, a car parts company, is closing two UK factories because of Brexit, leading to 570 fewer jobs. Among others: There’s a “Brexit-busting” ferry that sidesteps UK trade routes, drug companies are stockpiling medicine, and investors in the once-vibrant UK tech scene are drying up. (A great Twitter thread by a self-described 48%-er in Cambridge lists a wide array of industry impact. You can read it here.)

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