Ms. Creighton is Former Irish Minister for European Affairs and CEO of Vulcan Consulting, a Dublin/Brussels advisory firm.
As the one year anniversary of the United Kingdom’s decision to leave the European Union quickly approaches, the implications of Britain’s departure are now beginning to materialise. Although Brexit was a blow to the EU, the political fallout envisaged by many has not spread to the remaining 27 members of the Union. This is evidenced by Emmanuel Macron’s recent victory in the French Presidential Election and German Chancellor Angela Merkel’s continued rise in opinion polls. Rather, it is Britain’s economy and particularly its financial services sector that is now facing the harsh reality of life outside the EU.
Britain’s exit from the EU will result in the UK no longer being able to access the Single European market. This means that any UK-based financial services company will lose the EU financial ‘’passport’’ and therefore be unable to sell their services throughout the bloc. The EU passport is the legal mechanism that permits banks and other financial services companies based in one EU country to do business in other member states purely on the basis on their home state authorisation.
With British-based banks and other financial services companies set to lose their financial passport, many are looking elsewhere in the EU to set up subsidiaries or relocate altogether to ensure continued access to the single European market. This poses immense challenges for these international companies but presents lucrative opportunities for rival financial hubs across the EU, such as Paris, Frankfurt, and Amsterdam.
However, it may well be the smaller Irish city of Dublin that is set to benefit the most as several London-based global financial firms view the Irish capital as a highly appealing destination to relocate to.
Already a leading financial hub in Europe, Dublin boasts huge strengths in the administration and management of funds, cross-border insurance, and specialist finance such as aviation leasing and asset finance. As a result, the city is home to almost 250 of the world’s leading financial services firms, including half of the world’s top banks.
Dublin stands above its European rivals as a favoured alternative hub to London for a wealth of reasons. The 90 minute plane journey between the two capitals signifies the geographical proximity of these two financial services hubs. Both have a similar regulatory regime and law-based system. The two countries have strong cultural ties going back centuries and Ireland is the only other English speaking country in the EU–soon to be the only one.
In addition to the favourable tax regime of 12.5% and use of the Euro currency, Dublin is beginning to emerge as the #1 destination for UK-based companies relocating due to Brexit. Already, a number of international firms such as JP Morgan and Barclays are set to increase their presence in Dublin and expand on their workforce. With Ireland on course to be the fastest growing economy in the Eurozone for a fourth straight year, Dublin stands to reap the benefits presented by Brexit and enhance its reputation and position as a leading global financial services centre.
We are already feeling the optimism and buoyancy in Dublin and Brexit is still two years away.