LONDON — As many as 10% of European corporations could move all operations out of London as a consequence of Brexit, a survey from Swiss banking giant UBS suggests.
Late last week, UBS circulated its latest Evidence Lab Survey, having asked 600 “corporates” based in EU countries for their thoughts on a whole bunch of issues related to European politics. UBS asked questions on everything from investment plans in the UK following Brexit to whether they see Spain’s minority government as a risk factor.
However, the most enlightening answers from corporations came with regard to the movement of people and operations out of the UK in relation to Brexit.
A tenth of the 600 companies asked by UBS said they will leave the UK entirely, while 41% told UBS they “expect to reduce their UK capacity strongly.” 74% of the companies surveyed by UBS have UK operations.
“At the country level, the anticipated reaction is strongest amongst French companies (53%), followed by 44% of Spanish firms. The expected negative reaction is more measured, but still pronounced, amongst German (34%) and Italian firms (32%),” UBS writes in the study, published last Friday.
When it comes to the sectors where operations are likely to be shifted, the survey suggests that “relocation intentions are more measured amongst Consumer companies than Industrials and Materials.” Smaller firms expect to move less of their business than bigger corporates.
Here are UBS’ charts, illustrating the findings of their survey:
Jobs and business leaving the UK after Brexit is one of the most high-profile concerns for those who favoured remaining in the EU last year. These fears are particularly strong within the financial sector, where the likely loss of passporting rights could force banks to move thousands of employees out of London and other UK cities and to continental Europe.
Current EU law allows European banks to operate branches in the UK that do not need to be separately capitalised from the parent company abroad. Similarly, non-EU banks, such as those from the US or Asia, can use their London subsidiary to sell services to clients across the EU.
However, once Britain leaves the European Single Market those rights will be lost and could signal the start of a major movement of staff out of London. Banks including HSBC, Goldman Sachs, JPMorgan, and the survey’s creator UBS, have all made noises about shifting people out of the City and Canary Wharf.
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