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Brexodus from City of London to the EU slows

03/02/2021 | 02:34am EDT
FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain

LONDON (Reuters) - The shift in financial staff and assets from the City of London to the European Union because of Brexit has eased after Britain completed its full departure from the bloc, a tracker from consultants EY showed on Tuesday.

Financial services are not included in the EU-UK trade deal that came into effect on Jan. 1, largely cutting off the City from the EU.

Financial firms in Britain have opened subsidiaries in the EU, with Dublin and Luxembourg the most popular destinations, EY said.

"After the major hurdle of standing up new EU hubs, the days of significant swathes of asset and job relocation announcements appear to have passed and will likely be replaced by the slower yet ongoing movement of people and assets to Europe for compliance purposes," Omar Ali, a financial services managing partner at EY, said.

EY said in its latest Brexit Tracker that job moves have risen to almost 7,600, up by 100 since October, while the number of new hires in Europe since Britain's EU referendum in 2016 remains flat at around 2,850 new jobs.

The loss is a small fraction of total jobs in British financial services and is far lower than initial predictions.

There was also an incremental rise in the relocation of assets, now totalling almost 1.3 trillion pounds ($1.82 trillion), up from 1.2 trillion pounds previously, EY said.

On Jan. 4, more than 8 billion euros ($9.63 billion) in daily share trading shifted from London to Amsterdam and Paris, followed by chunks of trading in euro-denominated swaps.

The EU is targeting the clearing of euro swaps, which London dominates, although EU's Ali said splitting markets would not benefit Europe.

"Fragmentation of European financial services will serve to only benefit the U.S. and Asia," he said. Some of the swaps trading that has left London has moved to New York.

EY calculated its figures from public statements by 222 of the largest banks, insurers, fintechs and asset managers since June 2016 to the end of February 2021. A quarter, or 57 firms, said Brexit has or will have a negative impact on them, up from 49 in January 2020.

(Reporting by Huw Jones; editing by Barbara Lewis)

By Huw Jones

© Reuters 2021
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