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BREXIT Becomes A Disaster For UK With Loss Of Financial Jobs



William Byrnes

Many of the big banks, investment funds, and large insurance companies have announced that hundreds to thousands of employees are being relocated to group members European Union countries. The UK financial industry is on track to lose within two years much more than the previously forecast 75,000 direct high paying financial services jobs and with those will go the back office support and compliance jobs attached.

Based on current announcements by JP Morgan, Citi, UBS, Lloyds, HSBC, Barclays, Deutsche Bank, Standard Charter, Goldman Sachs, among others, more than 20,000 job relocations have already been announced that will occur. In total 232,000 financial jobs will leave London to EU financial centers such as those already announced to be receiving thousands of these positions: Dublin, Milan, Frankfurt, Paris.

The clearing of euro-denominated derivatives is highly likely to move to the euro area, like the ECB has long demanded. It brings 54,000 jobs, according to consultancy firm Oliver Wyman, which would rise to 232,000 including indirect jobs, according to the classified report by Ernst & Young for the London Stock Exchange.

Example of relocations announced include UBS that is moving 20% of its bankers, being 1,000 of its 5,000 from London to the EU. HSBC is moving 1,000 of its bankers to Paris, representing 20% of its London trading income. JP Morgan is relocating 1,000 employees pre-BREXIT to Ireland and is investigating where to move another 3,000 more post BREXIT. Deutsche Bank is moving half of its workforce, 4,000 jobs, out of the London. Barclays has made plans to move hundreds of bankers to its EU group banks. Standard Charter has had discussions with German regulators about moving its European-focused operations to Frankfurt. Goldman Sachs is moving hundreds pre-BREXIT out of London to the EU. The insurance industry is also moving. Thus, high paying UK law, accountancy, and audit jobs will also be lost. The UK will no longer feature as a player in EU and in world finance.

And these jobs losses are coming regardless of whether the UK pays the EU demand for $109 billion (see CNN) as the break-up settlement for the UK’s share of future subsidies to EU institutions and farmers.

And the worse is yet to come. As if the loss of its major job producer, the loss of a hundred billion of tax revenue, payment of another hundred billion to the EU, and loss of political stature, wasn’t enough, the UK will likely lose territorial sovereignty over Gibraltar. The EU has given Spain a veto right over any deal with the UK unless the UK agrees to Spanish demands for Gibraltar. Telegraph article Northern Ireland is specifically mentioned in the EU Negotiation Parameters. It may decide to unify with its Southern brethren rather than lose the EU rights and rebuild the border to stop the free trade and free movement that will no longer be allowed by the EU.

See the COUNCIL DECISION authorizing the opening of the negotiations for an agreement with the United Kingdom of Great Britain and Northern Ireland setting out the arrangements for its withdrawal from the European Union

In line with the European Council guidelines, the Union is committed to continuing to support peace, stability and reconciliation on the island of Ireland. Nothing in the Agreement should undermine the objectives and commitments set out in the Good Friday Agreement and its related implementing agreements; the unique circumstances and challenges on the island of Ireland will require flexible and imaginative solutions. Negotiations should in particular aim to avoid the creation of a hard border on the island of Ireland, while respecting the integrity of the Union legal order. Full account should be taken of the fact that Irish citizens residing in Northern Ireland will continue to enjoy rights as EU citizens

In line with the European Council guidelines, the Union should agree with the United Kingdom on arrangements as regards the Sovereign Base Areas of the United Kingdom in Cyprus and recognize in that respect bilateral agreements and arrangements between the Republic of Cyprus and the United Kingdom which are compatible with Union law, in particular as regards safeguarding the rights and interests of those Union citizens residing or working in the Sovereign Base Areas.

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William H. Byrnes has achieved authoritative prominence with more than 20 books, treatise chapters and book supplements, 1,000 media articles, and the monthly subscriber Tax Facts Intelligence. Titles include: Lexis® Guide to FATCA Compliance, Foreign Tax and Trade Briefs, Practical Guide to U.S. Transfer Pricing, and Money Laundering, Asset Forfeiture; Recovery, and Compliance (a Global Guide). He is a principal author of the Tax Facts series. He was a Senior Manager, then Associate Director of international tax for Coopers and Lybrand, and practiced in Southern Africa, Western Europe, South East Asia, the Indian sub-continent, and the Caribbean. He has been commissioned by a number of governments on tax policy. Obtained the title of tenured law professor in 2005 at St. Thomas in Miami, and in 2008 the level of Associate Dean at Thomas Jefferson. William Byrnes pioneered online legal education in 1995, thereafter creating the first online LL.M. offered by an ABA accredited law school (International Taxation and Financial Services graduate program).