Hi-tech financial firms flee UK amid doubts over Brexit – The Guardian

An exodus of “fintech” companies from Britain has begun, the chief executive of a leading firm has said, dashing the government’s hopes of building the UK into a world leader for the industry.

Every reasonably-sized company in the flourishing financial technology sector – involving e-lending, money transfers and the banking markets – is now actively looking at moving staff and investment out of the country because of the uncertainty caused by Brexit, it is claimed.

Simon Black, chief executive of PPRO Group, reputedly one of the fastest-growing fintech businesses in Europe, said his firm was now starting an operation in Luxembourg because of question marks over whether UK-based companies would still be able to trade in the rest of the EU under current “passport” rules which are granted to all member states.

“I don’t know of a licensed fintech company in the UK that isn’t looking at options,” he said. “Everyone is thinking about it and anyone that is any size, that is employing more than 10 people, is active. The exodus is beginning. It will be more visible in 2018.”

The UK has been a pioneer of the fintech revolution, which employs 60,000 here and has won government initiatives to help investment. The sector earned £6.6bn in 2015, and the then chancellor George Osborne said he wanted London to become “the global centre for fintech”.

Black said the industry could not wait for the outcome of Brexit negotiations, so investment that could have been made in the UK was being diverted overseas. “We have to plan for the scenarios when passporting ends, and that means we have to get a licence in another EU country.”

“The reason we can’t wait for results from the negotiation is that the full application process can take, in some countries, from six months right up to 18 months, and maybe longer. Then you need to recruit locally, you need specialists in compliance. It is a really big undertaking.”

Last week the French centrist presidential candidate Emmanuel Macron said he would take a tough line in Brexit negotiations if elected to lead France, raising fresh concerns that any arrangement for the City of London will be hard-fought. Macron also called for startups and businesses to come to his country.

‘We can’t wait’: Simon Black, chief executive of PPRO Group.

‘We can’t wait’: Simon Black, chief executive of PPRO Group.

Black said: “I expect passporting rights will be one of the last things that gets sorted in the negotiations. After listening to Macron, I think the EU guys are going to hold on to that bargaining chip. There are incredibly envious eyes being cast towards our financial services industry. We can’t wait. That’s the point, and there are many other companies like us.”

Black said he looked at settling in Ireland, the Netherlands, Belgium and the Czech Republic before opting for Luxembourg, where he has already recruited a managing director. Startup costs alone, including the application for regulatory approval on the continent, would cost €1m of his €31m turnover, he estimated.

He said: “Most of that money would have gone into the UK. We have 20 people in London, and that has grown rapidly. Without Brexit I would have been very confident that within five years it would be 200 people in London. Now it would be more like 40 to 50, and most of the difference will go into Luxembourg.“I know of a couple of companies that have shelved their international expansion. I know one big US investment bank, someone I spoke to at a conference last week, and he said their plans are much more advanced than has been picked up on by the press.

Liberal Democrat Treasury spokesman Susan Kramer said: “George Osborne promised to make London the centre for fintech but under this Conservative Brexit government it will only be job centres that see any dramatic growth.

“Ministers are in complete denial about the scale of the exodus. Independent estimates say a hard Brexit will cost the UK up to £200bn over the next 15 years.

“Germany has overtaken us as the fastest growing economy in Europe, and the EU is now out-performing the US. Yet Theresa May wants to surgically remove us from the European Single Market. And to think that the Conservatives used to be the party of business.”

Hi-tech financial firms flee UK amid doubts over Brexit – The Guardian

Leave a Reply

Your email address will not be published.