Banks in Britain are showing signs of restarting preparations for a no-deal Brexit after a lull in the shift of financial services jobs and capital from Britain to the European Union in the past few months, consultants Ernst & Young said on Wednesday.
EY’s Brexit Tracker of public announcements from 222 of the largest financial services firms in the three months ending May 31 found that the planned relocation of 7,000 jobs and £1-trillion ($1.67-trillion) in capital to new EU hubs was little changed from the prior quarter.
Banks, insurers and asset managers had prepared for a March 31 Brexit, but departure was delayed to Oct. 31. The prospect that Britain could leave the EU without a deal by the end of October has started to have an impact.
“In the last few weeks we have seen some firms restarting their programmes and we expect preparation activity for a no-deal to increase markedly throughout the summer,” said Omar Ali, head of financial services for EY in Britain.
Many firms have been reluctant to make the final decision to move to the EU until they absolutely have to, although investment banks have already moved nearly 1,000 jobs to Europe, EY said.
It is not clear if Britain will secure an exit deal with Brussels to avoid a rupture in trade links for Britain’s financial services industry.
Financial firms based in Britain have disclosed £1.3-billion in relocation costs, legal advice and contingency provisions, EY said. There is an additional £2.6-billion for capital injections to scale up new non-UK headquarters.
“So far, only a small proportion of the largest, listed firms have put a number on potential costs, which means this number is likely to be a drop in the ocean as firms prepare to do business post-Brexit,” Mr. Ali said.
“The financial impact of Brexit is beginning to fall to the bottom line, and firms are now making a direct link between financial performance and the tangible commercial impacts of Brexit.”
Job relocations so far fall far short of the tens of thousands that some consultants had predicted in the aftermath of Britain’s referendum in 2016 to leave the EU.
EY said that Dublin remains the most popular destination, with Luxembourg catching up.