84% of Fintech firms remained committed to relocation plans after Brexit

84 percent of fintech companies that planned to partially relocate UK operations to the EU after Brexit ultimately adopted those plans by 2023.; according to researchers at Anglia Ruskin University (ARU).

In 2018, researchers surveyed companies that were present that year FinTech Connect event in London. The survey asked whether companies plan to move to either the EU or the US, following the Brexit vote.

At the time, the agreement Britain organized when it left 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 fintech firms. Of these, 37 per cent believed it was likely that parts of their business would move to the EU if the UK left without a deal.

In the scenario involving Brexit with a deal, only 24 percent of companies proposed the same. Without an agreement, 13 percent of companies considered moving at least partially to the United States; with a total of 11 percent with an agreement.

Follow-up surveys in February 2022 collected data from sites including LinkedIn, Companies House and more. This found that 39 per cent of companies opened new offices abroad, without closing the establishment in the UK. A further 13 per cent moved at the same time as completely severing ties with the UK.

Overall, 84 percent of companies adopted their 2018 predictions in one way or another. This figure includes firms that said they would move completely but ended up moving only partially. Also included are firms that moved to the US but originally stated plans to move to the EU.

Brexit was a “significant push factor”, although “motives varied”

Publishers De Gruyter published the research in his journal ‘Advances in Economic Geography‘.

The ARU’s research also found that there was no real correlation between the final locations of firms that moved to the EU. Final destinations were very varied and included Paris, Amsterdam, Krakow and Barcelona.

However, in the case of firms that moved to the US, there was a much stronger correlation towards the New York City area.

Dr. Franziska Sohnslead author of the study and Associate Professor of Economic Geography at the ARU, said: “While most firms did not foresee relocation after Brexit, those that did saw the EU as the most important potential relocation destination, highlighting the importance of geographical and institutional proximity.

“Our results indicate that Brexit was a significant push factor for UK fintech firms anticipating a move to the EU and, to a lesser extent, to the US as well. We also found that companies with existing strong social and economic links with the EU were more likely to consider relocation.

“Motives varied, for example one firm moved its headquarters from London to Sofia due to declining growth opportunities in the UK, while another opened an office in Malta to retain its EU passport.”