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Brexit’s monetary impact on finance firms hits £4bn

The financial impact of withdrawal from the EU on major financial services firms in the UK has reached nearly £4bn, according to the EY Brexit tracker.

The audit giant found a three-fold increase in the number of statements from financial services companies confirming Brexit has had a tangible impact on their business abilities.

The difficulties around the UK’s departure are stretching to breaking point in the absence of firm decisions, EY adds.

With the extension of withdrawal from March to October, firms are putting departure plans on hold in an attempt to conduct business as usual for clients.

The research also shows planned jobs and expected asset moves of around £1trn from the UK into mainland Europe have remained flat in the last three months.

Tony Wickenden: The impact of Brexit on taxation

EY financial services leader Omar Ali says: “Many firms appear reluctant to make the final decision to move until they absolutely have to [but] firms are now really making a direct link between their financial performance and the tangible commercial impacts of Brexit.

“The financial impact is beginning to fall below the bottom line and capital deployed for supporting new non-UK headquarters is value which is not being returned to shareholders or reinvested in UK businesses.”

Having to defer mergers and acquisitions was found to be a key concern among firms tracked by EY, while falling share prices, lowered profits and dividend cuts were also flagged.

On the investment side, close to 1,000 UK-based jobs have been moved to the European mainland so far.

Dublin remains the most popular city for relocation, followed by Luxembourg City.

Behind the numbers: Measuring the uncertainties of Brexit

Ali says: “Over time, some capital may flow back into the UK, but currently is a net loss for our economy.  Only a small proportion of firms have put a number on potential costs and this is likely to be a drop in the ocean as firms prepare to do business post-Brexit.”

Firms’ attempts to ready themselves for the withdrawal date are expected to pick up in the coming months, however.

Ali says: “In the last few weeks we have seen some restarting their programmes and we expect preparation activities for a no-deal to increase markedly throughout the summer.”

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