BY Richard Summerfield
To date, the UK economy has been surprisingly resistant to Brexit. While in the run up to the referendum some prognosticators forecast that the economy would collapse, and others that the vote would usher in a new era of economic prosperity, with the exception of the fall in the value of sterling, and a recent decline in consumer confidence, nearly a year on from the vote the UK’s economic outlook has remained relatively calm.
One post-Brexit forecast from the pre-election days, however, is coming to pass, with the announcement this week that US financial services mega-power JP Morgan Chase is to move 1000 jobs out of the City of London, relocating them to Dublin, Frankfurt and Luxembourg as part of the firm’s Brexit contingency plans. The UK’s decision to recant from the European Union (EU) was always like to have an impact on the City, given that is the heart of the continent’s financial services sector. By withdrawing from the EU and potentially losing the all-important passporting rights, triggering Article 50 was always going to be transformative. It seems as if several different European cities will now benefit.
“We are going to use the three banks we already have in Europe as the anchors for our operations,” Daniel Pinto, JP Morgan’s head of investment banking, told Bloomberg on Wednesday. “We will have to move hundreds of people in the short term to be ready for day one, when negotiations finish, and then we will look at the longer-term numbers.”
Though JP Morgan is the first firm to solidify its plans, it will not be the only financial services firm fleeing the City. Last week, Richard Gnodde, head of European operations at Goldman Sachs, said his firm would need more people in Madrid, Milan, Paris and other EU centres. Equally, José Viñals, Standard Chartered’s new chairman, told his bank’s AGM that it would be pursuing expansion opportunities in the German city of Frankfurt. “We are looking at setting up a subsidiary in the EU to ensure we’re prepared.”
Deutsche Bank, too, has suggested it could move up to 4000 jobs out of the UK – nearly half its workforce in the country – despite previously maintaining its commitment to the City.
While there is still a great deal of confusion over the Brexit process and the UK’s future relationship with the EU, one thing is becoming very clear – financial services in a post-EU UK will never quite be the same again.