Dublin is in “a league of its own” when it comes to attracting business from the UK with at least 100 companies choosing the city as a post-Brexit location, according to a new report.
Compiled by New Financial, a think tank, the report – called Brexit & the City – the Impact So Far – examines the effect the UK's impending exit from the European Union has had on London's financial centre to date.
More than 5,000 financial firms in the UK use passporting to access the EU, and, without a withdrawal deal to secure the UK’s orderly exit, they will lose this access unless they set up a new entity in the EU.
The report identifies 269 financial services groups in the UK that have responded to Brexit in some way by relocating part of their business, staff, or legal entities to the EU.
Dublin emerges as “the clear winner”, with 100 choosing the Irish capital as a post-Brexit location. This represents 30 per cent of all the moves identified.
The city is also well ahead of its nearest rivals, with Luxembourg on 60 firms, Paris with 41, Frankfurt on 40, and Amsterdam on 32. “We expect these numbers to increase significantly in the near future,” the report states.
The report finds that banks have moved, or are moving, about £800 billion (€934 billion) in assets from the UK to the EU, which represents nearly 10 per cent of the entire UK banking system.
Insurance firms are moving tens of billions of assets, and asset managers have transferred more than £65 billion in funds.
Many large firms have had their new entities in the EU up and running for months, and having spent tens or hundreds of millions of pounds on their contingency plans are not going to relocate business back to the UK anytime soon, the report argues.
A new post-Brexit EU hub
It also identifies almost 5,000 expected staff moves or local hires in response to Brexit, but says this is from “only a small minority of firms” and that this number would “increase significantly” in the next few years.
“Dublin is in a league of its own when it comes to attracting business from the UK,” it says.
“We identified 100 firms that are relocating part of their business to or boosting their presence in the Irish capital, of which 86 have chosen Dublin as their main post-Brexit EU hub.
“We think there are more to come: the Central Bank of Ireland has said that it has received ‘well over’ 100 applications as a result of Brexit, and a sensible short-term estimate might be closer to 150.”
The report says Dublin’s main attraction is its common language, single supervisory structure and expertise, close ties with the UK financial sector, the liveability of Dublin itself, and its role as an established financial centre.
“This is reflected in Dublin’s dominant position in terms of attracting asset managers, hedge funds and private equity firms,” it says.
“Over a third of the firms choosing Dublin as their main EU hub are asset managers, and this rises to just over half when you include hedge funds and private equity.”
Dublin has also attracted two of the biggest moves in the banking sector, with Barclays and Bank of America Merrill Lynch choosing the city as their EU hub.
Between them, they have transferred £200 billion in assets to the Republic along with 250 staff.
Big insurance firms including Aviva and Phoenix Life have also transferred significant chunks of business to Dublin, moving £30 billion in assets.