European Headquarters On The Way Out of London?
Along with Brexit causing a mountain of problems for every business in the UK, the much larger and market defining corporations are not exempt from the potential changes being made, this has seen many industry giants head out the Brexit door to mainland Europe and its key to understand why.
Why are companies relocating their HQ?
Despite the triggering of Article 50 there was still the possibility of the UK maintaining their grip on high profile business, specifically in the financial industries, in the same form as non-EU members such as Iceland and Norway. Large EU agencies such as EMA & EBA , that provide jobs and large amounts of revenue for the UK economy, could still be hosted by a country outside of the EU as there is no specific ruling stating otherwise.
As mentioned above, the financial market will be affected more than most as businesses that have historically kept their EU headquarters in London, have now been put in jeopardy as these services and banks need to ensure they can continue to deal within the EU seamlessly from this position once the UK exits the single market. That said, many financial services companies have voiced their willingness to pay for maintained access to the EU single market while talks continue to leave this up in the air.
Which companies are going?
There are many companies who have already sealed their departure from London for reassurance
Revenue, Reputation of the UK financial sector and a loss of highly paid jobs that make up a large percentage of the UK’s high earners. Currently on this list of financial companies, amongst others, are:
Morgan Stanley – Frankfurt
Lloyds of London – Berlin
JP Morgan – TBC
Bank of America -Dublin
Moneygram – Brussels.
Moneygram had made evident its status in heading out of London early in 2018 with their statement that “once the UK is no longer part of the EU, it is anticipated the company will no longer be able to provide payments services outside the UK”. This movement confirmed by the recent issue of a bank licence from the National Bank of Belgium to Moneygram will represent a loss of around £200million in revenue to the UK industry.
This has been compounded by comments from Goldman Sachs CEO Lloyd Blankfein who stated in reference to the Wall Street company’s £300m investment into a new site in London dealing as its European base, that if the company had known about Brexit, “they might have made a different decision”.
These decisions also greatly affect the owners of the buildings inhabited by these behemoth corporations. Areas in London’s capital where these globally influential companies would have been based are also having to adapt. Areas such as Canary Wharf, where the majority of the financial companies are based, have begun seeking out the ‘next big thing’ and to not settle for anything below previous company levels and continue to maintain its position as a global hub of finance. Shoreditch continuing to pursue the SMEs and growing businesses while areas such as Mayfair began developing their residential revolution early on in the Brexit conundrum.
What is the UK Government trying to do to stop this?
In the face of extreme criticism from either side in the debate, it is clear to all that there is no clear direction as the EU continues to block off all of the governments proposals to open up fresh trade links. The worst possible outcome when considering the potential movements of financial and pharmaceutical companies is if the UK’s financial services cease being seen as equal to those if its European neighbours under the all-powerful EU’s regulations.
Vince Cable, the former business secretary lambasts Davis’s suggestion the UK could keep the EMa and EBA showed “just how little grasp the government has of the potential consequences of Brexit.” The Liberal Democrat leader continued by saying “This marks the beginning of the jobs Brexodus. Large private sector organisations are also considering moving to Europe and we can expect many to do so over next few years.”
Its important to see that these decisions aren’t seen as a giant upheaval for the EU, but in fact an exciting proposition that is allowing other cities in the union to flourish. For instance, the task of finding a new suitable home for the European Banking Authority, something essential to all business across Europe, was deliberated on for just over an hour before Paris was declared the lucky recipient. It is clear that Europe is ready to benefit from the UKs current inability to prove its future credentials and the longer this continues the more beneficial it continues to be for EU countries. This is the way business works, but it is clear from this side of the channel that the longer it is left unclear, the longer we remain like a boxer winded from shots to the body hoping to staveoff the knock-out blow.