When the Brexit decision came in on 24th June last year the City of London’s reaction was largely pragmatic. Nobody knew what the revised EU relationship would look like, although most agreed that some level of employee relocation would take place. The Union’s free movement policy had seen London attracting some of the best foreign talent, with at least 11% of City employees being non-British EU nationals. Half of this 11 % was comprised of Italians, French and Irish nationals like me.
Long before the UK’s ”Hard Brexit” intentions started to emerge, banking giants like JP Morgan, UBS and HSBC were publicising contingency plans to move people out of London if necessary. Meanwhile, established and emerging financial centres across Europe such as Frankfurt, Paris, Luxembourg and Dublin were positioning themselves as potential alternative locations. In Greg Collins’ blog at the start of 2015, he talked about the potential development of different financial centres. The issues that are so relevant now were absent from Greg’s post because David Cameron was still 4 months from winning the general election and the EU referendum pledge coming into effect. He focused on the presence of exchanges, relevant professional services firms, infrastructure and expertise as being key factors. With London’s access to the single market under serious threat, his other points, about educated workforces and suitable property being available, take on a new level of importance.
I’m pleased that there are some strong arguments for my home city of Dublin, not least because I’ll be moving back, closer to my folks, to set up the new JP Reis office there. For the likes of JP Morgan, Citi and Goldman Sachs it presents the only English speaking territory with guaranteed full access to the Single Market. The cultural differences are low, as is the corporate tax level, property is relatively cheap, infrastructure is advanced and Ireland ranks higher for the ease of doing business than France, Spain or Luxembourg in particular. Dublin also has that time zone benefit that London enjoys where the working day overlaps those in the Far East and the West Coast US. I think that Dublin has the best opportunity of any city to work in tandem with London as a binary financial hub with one foot inside the EU and one more globally positioned. Especially as people like me who have done their stint in London will tend to drift back there and keep the lines of communication open. Obviously, any arrangement of that nature would have to satisfy the regulators and respective governments.
The other location that stands out to me is Copenhagen. Greg mentioned the Scandinavians in his post last year but namechecked Stockholm over the Danish capital, he told me it was a 50/50 between the two. It has a very well-educated population, an English friend of mine who visited Dublin and Copenhagen says that if you ask a stranger a question in English you’ll get a more sensible answer in Denmark! The city actually ranks quite low among Danish regions for ease of business but it has finally started thinking about post-Brexit opportunities and is quite strong in Fin-Tec.
Continental Drift and New Arrivals
It could be that with different strengths and weaknesses, no outstanding European alternative to London will emerge. While Dublin and Copenhagen aren’t as well established, Frankfurt and Paris present their own barriers to smooth operations, so banks will distribute a proportion of their people away from London around existing European locations. If this happens, Irish professionals drifting back home may take their jobs with them quite painlessly and we could create a lot more jobs and inward investment if we play our cards right.
The other thing to think about is new entrants. Citi is one bank that is well entrenched with its retail banking HQ and 2,500 staff in Dublin having made an extra commitment in 2014. Meanwhile, as well as the Americans, the list of the world’s biggest banks is starting to fill up with Chinese firms who still have relatively small footprints in Europe.
I’m delighted to see that the Irish government is actively pursuing Asian partnerships. This year has seen progress in talks with the Bank of China [BOC] and Sumitomo Matsui Banking Corporation [SMBC] about transferring their European HQs from London. Ireland has also agreed informal membership of the Asian Infrastructure Investment Bank [AIIB] and our Finance Minister, Michael Noonan, presented the bank’s president, Jin Liqun, with a formal application letter in Dublin on 15th February.
JP Reis in Dublin
I don’t want to see London’s economy collapse and I’m optimistic that even in the event of the most brutal Brexit, The City’s overwhelming advantages will see it find a strong position in the emerging global economy. Meanwhile I am excited that there are logical reasons for Dublin to do well and I’m happy that I can relocate within the JP Reis family. Ireland will become another formal outpost of the company from where we can offer our full range of consultancy and technology transformation services. I’m pretty sure that some familiar faces will be visiting to watch the rugby and maybe have the odd sip of Guinness too.