Brexit: Is the UK doomed to exodus?

Author: | Published: 8 Jul 2019
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Since the summer of 2016, a state of limbo has taken over Britain. The chaotic attempts to bring forth a deal between the UK and its former trading bloc partners in the EU is proving a long, drawn-out affair that's causing regulatory headaches on the continent and in London, as well as financial strains for businesses considering leaving their London homes for pastures new. From France to Portugal, the Netherlands to Ireland, plenty of countries have been keen to take a piece of Britain's Brexit pie – which still appears warm and ready for the taking.

At IFLR's Fintech Europe conference in London, one panel discussed whether when it came to Brexit, it was simply a case of "waiting to push the button", and jumping ship. However, it seems that it even if the UK was to revise its decision via a parliamentary vote or even a fresh referendum, it might be too late to convince businesses already turning their backs on London. One panellist at the event indicated that her firm had already completed an application with regulators in a new member state, and that it was "now too late to turn back".

This clearly breeds apprehension for those who work in Britain's financial services. Even if Brexit weren't to happen, or a softer option such as membership of the European Economic Area was pursued, London may yet see its influence washed away over time. This is both in respect of established financial institutions and those in the flourishing fintech scene.

Some of the world's biggest banks, such as Bank of America, have long warned that there would be no turning back from their decision to relocate. The second-largest institution in the US paid out a mammoth sum of $400 million to relocate its European headquarters across the Irish Sea to Dublin. Meanwhile Barclays has reportedly been set back £200 million shifting its EU base to the same city.

When it comes to fintech, a recent PwC report anticipated a growth slowdown in the UK in comparison to other EU states such as Lithuania, which has recently updated its regulatory regimes to compete with the UK. TransferWise, established by Estonia entrepreneurs Kristo Käärmann and Taavet Hinrikus, recently applied for a licence in Brussels, seeing it relocate to Europe's political centre.

As Britain lulls in further uncertainty about where it will stand in the world, and with the next prime minister likely to be even more ambitious about pursuing a hard Brexit, it seems that Britain's financial sector is all but destined to take a hit once the UK's messy divorce is finalised. The question is whether its longstanding reputation for innovation and gold standard regulation will help it come back from the slump.