Eighty-four per cent of fintech firms that planned to partly relocate UK operations to the European Union after Brexit ultimately enacted those plans by 2023.; according to researchers at Anglia Ruskin University (ARU).
In 2018, researchers surveyed companies present at that year’s FinTech Connect event in London. The survey asked whether companies were planning to relocate to either the EU or the USA, following the vote on Brexit.
At the time, the deal the UK organised when leaving the EU was not yet known. As a result, researchers offered three scenarios; a no-deal Brexit, one with a deal negotiated with the EU; and a scenario where Brexit was cancelled.
The survey covered the opinions of 38 UK-based fintech firms. Of these, 37 per cent felt it was likely that parts of their business would relocate to the EU if the UK left without a deal.
In the scenario involving Brexit with a deal, only 24 per cent of companies suggested the same. Without a deal, 13 per cent of firms considered moving at least partially to the US; with a total 11 per cent with a deal.
Follow-up research in February 2022 collected data from sites including LinkedIn, Companies House and more. This found that 39 per cent of firms opened new offices abroad, without closing UK establishment. A further 13 per cent relocated while also completely dissolving their ties to the UK.
Overall, 84 per cent of firms enacted their predictions from 2018 in some way. This number includes firms who said they would relocate fully but ended up only relocating partially. Also included are firms that relocated to the US but originally stated plans to go to the EU.
Brexit was a ‘significant push factor’, although ‘motives varied’
Publishing house De Gruyter published the research in its journal ‘Advances in Economic Geography‘.
ARU’s research also found that there was no real correlation between the final locations of firms which relocated to the EU. Final destinations were highly varied and included Paris, Amsterdam, Krakow, and Barcelona.
However, regarding firms that relocated to the US, a much stronger correlation existed towards the New York City area.
Dr Franziska Sohns, lead author of the study and associate professor of economic geography at ARU, said: “While most firms did not anticipate post-Brexit relocation, those who did saw the EU as the most important potential relocation destination, highlighting the significance of geographical and institutional proximity.
“Our results indicate that Brexit was a significant push factor for UK fintech firms anticipating relocation to the EU and, to a lesser extent, also to the US. We also found that firms with existing strong social and economic relations with the EU were more likely to consider relocation.
“Motives varied, for example, one firm moved their headquarters from London to Sofia due to declining growth opportunities in the UK, while another opened an office in Malta to keep the EU passport.”
