Brexit appears to be having a less severe impact on London’s financial sector than expected. According to the accounting and consulting firm EY, more than 7,000 jobs have disappeared from The City and moved to the European Union. EY stresses that there were initially fears of a much larger move, but it still could.
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Because of Brexit, British banks are no longer automatically licensed to operate in the EU. As a result, a number of banks had to move their offices to the mainland. As a result, 7,400 jobs were transferred from the UK to the EU. That’s just below the 7,600 jobs the bureau projected at the end of 2020. It’s also well below the 12,500 jobs that financial services firms warned about the 2016 Brexit referendum.
The most famous Paris
The move was mainly to Paris. After Brexit, more than 2,800 people went there to work. After that, Frankfurt and Dublin were the two most popular destinations for financial service providers. 1,800 and 1,200 jobs, respectively, were moved from London.
However, this step is far from over, Ey believes. It is very likely that UK bank branches in the EU will need more staff in order to comply with the EU banking license rules. The European Central Bank is overseeing this.
Supervision doesn’t equal yet
The United Kingdom and the European Union reached a Brexit agreement at the end of 2020, after an 11-month transition period, which included several agreements on reciprocal trade. No definitive agreements have yet been concluded regarding the financial sector. Brussels and London have yet to come to an agreement in which they promise to regard each other’s oversight of the financial sector on an equal footing. This makes it easy to do business in the EU and UK at the same time. The European Union has proposed extending a temporary agreement on cross-border financial services, which will run until June.
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