The good news about Article 50 finally being implemented is that it brings to an end all that news speculation surrounding “when will Article 50 be invoked?” The bad news, however, is that it starts another round of speculation about what Brexit will actually mean.
For those in the business world – and particularly in the insurance sector - who prefer action rather than talk, there’s no time like the present. Brexit is happening, even if it takes two years to negotiate its ins and outs, and for insurers that means it’s time to set up base outside their usual London City headquarters: but where to go?
A couple of firms have already shown their hand – AIG has committed to a move to Luxembourg, while Lloyds of London is also expected to follow suit. Beazley meanwhile is expanding its Dublin office. However, what about those that remain? For them it seems that Dublin and Luxembourg may be outmatched: by Frankfurt.
That is, at least, according to a new Financial Times report that says the German city has the edge over not only Dublin and Luxembourg, but also over the likes of Amsterdam, Paris, Milan and Madrid based on interviews with senior financial bosses.
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“Over long periods of time, activity moves to the centre of gravity, and the location of the European Central Bank in Frankfurt is an example of this,” John McFarlane, chairman of Barclays and TheCityUK lobby group told the publication.
“The Germans are so far ahead [that] the French can’t quite believe it,” added another notable commentator.
London is, of course, expected to remain as the financial epicentre, and, as the AIG and Lloyd’s of London potential moves suggest, Luxembourg is also likely to become a hot insurance destination. However, Frankfurt’s positioning with the European Central Bank mean that it is emerging as a strong favourite, even while it may lack the flair of more glamorous contemporaries like Paris.
It has already emerged that three of the top five US banks – namely JPMorgan, Morgan Stanley and Bank of America Merrill Lynch – have all placed Frankfurt on their shortlist. Goldman Sachs too, already has an operation in the city and it is likely that other financial players, including insurers, will follow suit preferring to have a central base with a cluster of financial services grouped together rather than scattered across the continent.
It has been estimated that London could lose around 75,000 jobs in the financial sector as a result of the Brexit decision – with an EY study putting the figure at 232,000 across the UK.
