Brexit Fallout: European Cities Adapt to Shift in Financial Hubs

Strategic Insights -

As the Brexit deadline loomed, Japanese bankers reconsidered their plans for establishing a post-Brexit EU base, opting for Frankfurt instead of Amsterdam. City leaders and financial experts now believe that Brexit has created about 3,000 extra jobs in the German financial capital by June, with an expected influx of 1,000 more jobs in the following months. The shift in financial hubs has seen cities like Paris, Frankfurt, and Luxembourg benefiting from the exodus, with even smaller towns like Milan and Dublin seeing an influx of talent. However, many banks have chosen to maintain their London presence, with some even relocating staff back to the UK.

Key Takeaways:

  • About 3,000 extra jobs have been created in Frankfurt by June due to Brexit, including related consultants and IT services providers.
  • An expected 1,000 more jobs are expected to move to Frankfurt in the following months, with 500 jobs still being negotiated due to the Covid-19 situation.
  • Cities like Paris, Frankfurt, and Luxembourg are benefiting from the exodus of financial talent, with some smaller towns like Milan and Dublin also seeing an influx.
  • Many banks have chosen to maintain their London presence, with some even relocating staff back to the UK.
  • France, Italy, the Netherlands, and Spain introduced special tax breaks for financiers relocating to their countries, while Germany changed its labour law to make it easier for companies to fire highly paid "risk-takers".
  • French bank Societe Generale has moved about 300 jobs out of London, while American bank JPMorgan has relocated about 400 staff to Paris.
  • The expected flood of bankers leaving London has proved to be a trickle, with most investment bankers and traders heading to Frankfurt and Paris.
  • Asset managers favored Luxembourg and back-office operations have gone to Dublin and Warsaw.

Statistics:

  • Overall banking jobs in Frankfurt are expected to fall 3% to below 63,000.
  • 7,000 wealthy Italian expats chose to come back between 2017 and 2019, and have benefited from a 50% tax exemption on their Italian income, increased to 70% from this year.
  • More than 50-60 Brexit-related admissions have been recorded at Frankfurt International School in total.
  • 264 Brexit-related admissions were recorded at the bilingual Ecole Jeannine Manuel in Paris.
  • 70 kids from a bank just told the school they need places.
  • More than 1,500 positions have been moved to Frankfurt, with 2,000 expected to follow over the next two years, according to Helaba estimates.
  • Deutsche Bank has shifted about 100 positions out of London to Frankfurt, with another 200 to 300 to follow.

Sources:

  • "Brexit creates 3,000 jobs in Frankfurt", by Martin Arnold, David Keohane, Silvia Sciorilli Borrelli, and Martin Arnold, published in the Financial Times on October 12, 2020.
  • "France, Italy, Netherlands and Spain offer tax breaks to financiers", by Martin Arnold, David Keohane, Silvia Sciorilli Borrelli, and Martin Arnold, published in the Financial Times on October 12, 2020.
  • "Banks repatriate staff from London to deal with eurozone-related activities", by Martin Arnold, David Keohane, Silvia Sciorilli Borrelli, and Martin Arnold, published in the Financial Times on October 12, 2020.
  • "Societe Generale moves 300 jobs out of London", published in the Financial Times on October 12, 2020.
  • "France brings in 140 global industry and banking bosses to dinner at Versailles in 2018", published in the Financial Times on October 12, 2020.