Brexit's Toll on Banking Jobs is Merely Bad, Not Awful

Brexit hasn’t quite been the jobs-killer that was once feared for the U.K.’s vaunted banking sector, a report released Thursday by Ernst & Young showed. That’s the good news. The bad news: It could get worse, much worse.

With exactly six weeks to go until the U.K. is scheduled to leave the European Union—whether there is a deal in place or not—EY reported that just 1,000 investment banking and other finance sector jobs have made the move from the U.K. to the continent since the 2016 Brexit referendum vote. The EY report—which has been updated regularly, post-Brexit—is based on a survey of activity at some 222 London-based financial firms.

Instead of accelerating as the deadline draws nearer, the departures have remained more or less flat, even in the wake of increased likelihood of a no-deal Brexit after the more combative Boris Johnson replaced Theresa May as British Prime Minister in July.

Of course, just because they’re not rushing for the exits doesn’t mean all is well in the city of London. Earlier this year, Goldman Sachs CEO David Solomon told attendees of the World Economic Forum in Davos that because of the Brexit uncertainty the investment bank had adopted a policy of adding headcount in its other European offices while capping hires in London.

Of the UK-based bank personnel who have left since 2016, Dublin remains the most popular relocation destination, followed by Luxembourg (where it’s contributed to a surge in house prices) and then Frankfurt.

“Over the past three months, financial services have kept relatively quiet on the status of their Brexit plans,” said Omar Ali, the UK Financial Services leader with EY. “Given that many companies had pulled out all the stops to be ready ahead of the March deadline, much of the planning of temporary solutions for staff and operational moves has already been completed.”

But the same report said that could be just the tip of the iceberg, with 7,000 more banking jobs estimated to bound for other European cities in the “near future,” taking as much as 1 trillion pounds (around $1.25 trillion) in assets with them. That figure is up from 800 billion pounds ($1 trillion) reported previously.

EY said that around two out of five of the 222 firms it is following with its “Brexit Tracker” have publicly declared they will move at least some of their operations to Europe, or that they are considering such a move. Almost two out of three universal banks, investment banks, and brokerages—a 48-firm subset of the first group—say the same thing.

Still, the estimates predict less impact than originally believed. In the wake of the June 2016 Brexit vote, the more alarmist critics had warned that London could see an exodus of tens of thousands of banking jobs that would erode the city’s status as the continent’s financial capital in favor of Paris or Frankfurt.

“Financial services firms have put the building blocks in place but have so far transferred fewer staff and assets to the continent than expected,” Ali said. “So, there is still lots for the industry to contend with as we approach Oct. 31.”

EY said there was evidence that financial services companies are focusing on reassuring their customers, shareholders, and other stakeholders that they are ready for that Oct. 31 deadline, with several making public statements to say they are well positioned for the U.K.’s departure from the European Union, whether it’s a hard departure or a soft one.