With a nod to the late Bob Marley, Brexidous is the term I’m giving to the relocation of businesses and staff from the UK (mainly, but not exclusively London) to other countries that will be remaining in the EU after March 2019. Businesses which are currently UK based but do a lot of financial services business in the EU are almost certainly going to lose “passporting” facilities once the UK leaves the EU.
Passporting is a system whereby a business based in one EU country can trade across the whole bloc as if it had an office in every member state (i.e. as if it were “home” based). The facility has allowed global firms to base themselves in The City and then be treated as if they were EU businesses, because of their (significant) UK operations. As the UK leaves the EU, global firms will move enough (or perhaps all) of their UK based operations to new homes within the EU in order to continue to be able to benefit from passporting. Of course, British businesses that wish to continue to work within the EU will be forced to do the same thing, or lose a very significant competitive advantage (yes, that’s what I thought too…).
With notification of withdrawal taking place this week, Lloyds of London and Royal London have announced that they are setting up satellite businesses within the EU. Lloyds will set up a facility in Brussels whilst Royal London will expand an existing Irish office.
It is reported that JP Morgan, the American investment bank, is negotiating for a Dublin property which could house 1000 employees. Citigroup confirmed that whilst London will remain an important centre, it too is actively looking to relocate part of its business in the face of a hard Brexit.
Prior to last June’s referendum, Jamie Dimon, JP Morgan’s chief executive suggested that a leave vote could see a quarter of the company’s UK workforce of 16000 moved from the UK. At the time, Leave campaigners denounced this as part of “project fear”, of course. Citigroup has 9000 UK based staff, but it was not immediately clear how many of these jobs would relocate or be lost.