Brexit was one of the most formative events in the recent history of the EU. Major changes have taken place in areas such as the economy and trade, politics and governance, law, energy, and the environment, as well as foreign and security policy. The labour market has also changed as a result. In the following article, we examine the changes to the financial labour market that have occurred because of Brexit and discuss potential future developments by the new governing Labour Party. We also look forward to hearing your views on this topic.
What effects did the Brexit have on the EU financial labour market?
Only a few political events in recent decades have had such a significant impact on the financial labour market across Europe. As a result of Brexit between £800 billion (Wright, Benson, & Hamre, 2019) and £1.3 trillion of assets had already been shifted to Europe by 2022 (EY UK, 2022), representing around 10% of the total assets held in the UK banking system in 2021 (Chapman, 2021). Since then a stabilisation has taken place with the UK attracting the highest amount of financial and professional foreign direct investment in Europe in 2023 (Katanich, 2024).
What measures have financial companies taken as a result of Brexit?
The migration of assets is also reflected in the number of financial companies that have relocated their headquarters. According to “The Independent”, this involves around 440 financial companies. Dublin has established itself as particularly popular (135), closely followed by Paris (102). However, other cities such as Luxembourg (95), Frankfurt (63) and Amsterdam (48) have also made significant gains in terms of financial service providers. (Chapman, 2021). Less frequented locations included Madrid, Milan, and Brussels (EY UK, 2022).
Which locations have benefited the most because of the migration?
A clear trend can also be seen in the choice of new locations. While the banking sector predominantly chose Frankfurt and Paris as its new main location, wealth and asset managers re-located mainly to Dublin and Luxembourg. Insurers, however, have opted for a variety of different locations such as Dublin, Brussels, Luxembourg, and Paris. (EY UK, 2022).
What impact has Brexit had on the job market?
While the UK’s financial labour market has seen a significant loss of jobs, the EUs has benefited all the more. While estimates at the beginning of Brexit assumed 12,500 job relocations (EY UK, 2022), the figure ultimately settled at around 7,400 (Bath, 2023; Williams-Grut, 2021). However, a very different picture is emerging here in comparison to company relocations. According to EY UK, the big winner is Paris (2,800), followed by Frankfurt (1,800) and Dublin (1,200).
What measures have banks taken as a result of Brexit?
Brexit also forced some banks to rethink their strategic positioning to continue to have access to the EU market. An important step in this process was obtaining full banking licenses within the EU. A total of 15 banks have acquired such a license since Brexit. These can be divided into two categories: nine of these banks were classified as “less significant institutions”, while six banks are directly supervised by the European Central Bank as “significant institutions”. (ECB Banking Supervision, 2023).
What changes to the financial labour market can be expected because of the Labour Party’s election?
First, it should be noted that the Labour Party had voiced its opposition to Brexit. Prime Minister and party leader Keir Starmer was aware of the negative economic impact and advocated a clear position of the Labour Party in favour of remaining in the EU (Cooper & Casalicchio, 2020). However, hopes of re-entry into the EU are in vain, as he categorically rules this out (Chapman, 2021; Stacey, 2024). Instead, he wants to ensure economic stability by means of a maximum of 25% corporation tax (Labour Party, 2024) and strengthen the trading relationship with the EU again (Mata, 2023; Vohra, 2024).
Still not learned enough about the impact of Brexit on the EU financial labour market? Make sure to also check our LinkedIn, there you will find further graphs that represent the impact of Brexit.
Image source: Own illustration based on Elite Business Magazine