© Reuters. FILE PHOTO: City of London's financial district is featured with office skyscrapers commonly known as "Cheesegrater", "Gherkin" and "Walkie Talkie" in London, UK
By Huw Jones
LONDON (Reuters) – Over 400 financial firms in the UK have relocated operations, people and assets totaling £ 1.4 trillion ($ 1.4 trillion) to hubs in the European Union as a result of Brexit, said Friday.
"We consider this to be an underestimation and expect the numbers to increase over time: we are only at the end of the start of Brexit," the study says.
The EU has given the UK little direct market access for financial services that were no longer included in the bloc's trade deal with the UK as of January.
"This access is unlikely to be imminent, so it may be better for the industry to bear the damage caused by Brexit and instead focus on recalibrating the framework in the UK to better focus on uniqueness the UK financial markets are tailored to the service industry, "the study says.
Around 7,400 jobs have moved from the UK or were created at new hubs in the EU, according to the study. Bankers have told Reuters that some staff changes have been delayed due to COVID-19 travel restrictions.
The total of 440 moves is higher than expected, well above the 269 in New Financial's 2019 survey. New Financial believes the actual number is well over 500.
New financial graphic 1: https://fingfx.thomsonreuters.com/gfx/mkt/bdwvkbzdopm/New%20Financial%20Graphic%201.PNG
Dublin has emerged as the biggest beneficiary with 135 moves, followed by Paris with 102, Luxembourg 95, Frankfurt 63 and Amsterdam 48.
"This redistribution of activities in the EU has turned the clock back by about 20 years," the study says.
Banks have moved or moved over £ 900 billion in assets from the UK to the EU while insurers and asset managers have moved over £ 100 billion in assets and funds, lowering the UK tax base.
"We assume that Frankfurt will be the 'winner' in terms of wealth in the long term and that Paris will ultimately be the biggest beneficiary in terms of jobs," the study says.
The fall of London as Europe's largest equity trading center since January was the most visible sign of a Brexit in the financial sector.
The study estimates that 300 to 500 smaller EU financial firms could open a permanent office in the UK, far fewer than the prevailing projections of around 1,000.
The City of London will remain the dominant financial center in Europe for the foreseeable future, but its influence will disappear, which could lead to a reduction in the UK's £ 26 billion annual trade surplus in financial services with the EU, the study added.
New financial graph 2 https://fingfx.thomsonreuters.com/gfx/mkt/yxmpjdnlopr/New%20Financial%20Graphic%202.PNG
($ 1 = 0.7262 pounds)
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