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Brexit has caused significant damage to UK financial services, irrespective of what happens now
Regardless of what happens now, Brexit has exacted unprecedented damage on Britain’s financial services industry.
As the Brexit saga continues, the actual process of departing the European Union is becoming more and more extraneous. As it stands, even if Britain didn’t leave the EU, unparalleled damage has already been done to the financial services sector, which makes up around 6.5 per cent of the country’s GDP.
After a number of years of uncertainty and the absence of strong leadership from all parties, financial services companies have had to take precautionary actions to secure their interests.
This usually means relocating parts of their business or key members of staff to places including Paris, Luxembourg, Dublin, Frankfurt and Amsterdam, as well as establishing legal entities in the EU. At times, this has been undertaken publicly, but many operations have not been divulged, so the full extent of the situation is in fact unknown.
By having no meaningful access to the EU’s single market, Britain’s financial services industry is preparing for what is potentially going to be a long, fixed decline, with the country eventually losing its sought-after title of the world’s top financial centre.
Moreover, the absence of confidence in the UK’s financial services sector will undoubtedly affect jobs and the government’s tax base.
Although the perpetual withdrawal of investment, talent and activity away from Britain’s financial services may be able to be brought to an end, and the situation could be improved, in terms of confidence, this needs to be redeemed sooner rather than later.