While much of the discourse surrounding Brexit has focused on the overall impact to the UK’s economy and financial services specifically and how it will undermine the country’s economic prominence, a report out of Bovill today puts a bit of a different spin on things. According to the financial services consultancy, over a thousand European Union based financial services firms plan on opening up new offices in the UK as the country exits the EU. So while we have read about plenty of financial services firms, including Fintechs, opening new offices in continental Europe, Bovill says the reverse will be true for EU based firms seeking to continue to service British consumers and businesses.
The report states:
“More than 1,400 EU-based firms have applied for permission to operate in the UK after Brexit, with over 1,000 of these planning to establish their first UK office, according to a Freedom of Information request (FOI) by financial regulatory consultancy Bovill. The FOI provides evidence that London and the UK will continue to be a leading player on the global financial stage after Brexit.”
The FCA had received 1441 applications as of October 2019. Surely, that number has continued to move upward in the ensuing months. Bovill states that the FOI discovered that “83% of passporting firms that applied under the TPR currently operate under a ‘service’ passport, which means they do not currently have an office in the UK.” So these will be new offices.
In looking more closely at the applicants, over 100 banks are planning to open up offices for the first time in the UK but firms looking to set up shop in the UK span the spectrum. Applicants include asset managers, insurance firms, exchanges, and yes, of course, Fintechs.
The countries with the highest number of applications include:
- Ireland – 228
- France – 170
- Cyprus – 165
- Germany – 149
Overall, in a world of unintended consequences, a reverse Brexit appears to be in play. London remains a global financial center and if you want to be a part of it – you will will benefit from a physical presence.
“These figures clearly show that many firms see the UK as Europe’s premier financial services hub. This is a clear vote of confidence in the UK financial services sector and good news for the UK’s service economy overall. The high proportion of firms without an existing UK branch that have applied for the TPR suggests there will be some movement of staff from these EU27 firms into the UK,” says Michael Johnson, a consultant at Bovill. “Although much attention has been given to the number of UK firms moving staff and operations into Europe, there is also likely to be movement in the opposite direction. The results of the FOI may have been anticipated by those in the industry, many of whom have recognised for some time that London remains Europe’s only truly global financial centre, and firms on the continent with global aspirations will need to continue to do business here.”
United Kingdom Strong
So is all the hand wringing about the economic impact of Brexit all for naught? Well, only time will tell. The details regarding the European divorce are still being worked out. Any new trade agreements, such as a possible big one with the US, will have an impact. Regarding the UK Fintech sector, this appears to be good news for these innovative financial services firms.
Bovill Partner Ed O’Bree states:
“In practical terms, these figures mean that European firms will be buying office space, hiring staff and engaging legal and professional advisers in the UK. This augurs well for the UK economy, as the country will retain its reputation as a prime location for financial services in Europe.”