$1 Trillion Leaves Britain Because of Brexit

By: Yassmine ElSayed

CAIRO, Jan. 8 (SEE) Banks and other financial companies have shifted at least £800 billion ($1 trillion) worth of assets out of the UK and into the European Union because of Brexit, EY said in a report published on monday.

“Many banks have set up new offices elsewhere in the European Union to safeguard their regional operations after Brexit, which means they also have to move substantial assets there to satisfy EU regulators. Other firms are moving assets to protect clients against market volatility and sudden changes in regulation”.

The consultancy said that the figure represented roughly 10% of the total assets of the UK banking sector, and was a "conservative estimate" because some banks have not yet revealed their contingency plans.

"Our numbers only reflect the moves that have been announced publicly," said Omar Ali, head of financial services at EY. "We know that behind the scenes firms are continuing to plan for a 'no deal' scenario.",

EY has tracked 222 of the biggest UK financial services companies since the Brexit referendum in June 2016.

EY said that the companies it tracks have already created around 2,000 new jobs elsewhere in the European Union in response to Brexit.

EY said financial companies were likely to move more assets and create more jobs in other European cities over the coming weeks. "The closer we get to March 29 without a deal, the more assets will be transferred and headcount hired locally or relocated," Ali added.

According to CNN, Britain is scheduled to leave the European Union in just 81 days, but Prime Minister Theresa May still needs to win support in the UK parliament for the porce deal she struck with the rest of the European Union.

Parliament is due to vote on the deal next week. If May ultimately fails to push the agreement through, the chances of the country crashing out of the European Union without a deal will soar.

For financial institutions, a no-deal Brexit would be a nightmare. The country's agreements with EU regulators would cease to exist and banks would find themselves in a legal vacuum, meaning they would be unable to continue doing some of their business across the bloc.

While the European Union has said it will implement some steps to avoid a complete meltdown, it said its contingency plan is only a short-term solution aimed at protecting its own interests.

The financial services industry employs 2.2 million people across the country, and contributes 12.5% of GDP. It generates £72 billion ($100 billion) in tax revenue each year, according to the City of London Corporation.