A large number of EU finance firms are eyeing up offices in the UK for the first time in order to keep operating after the UK's transition from the EU's customs union.
The BBC reports that 1,500 money managers, payment firms and insurers have applied for permission to continue doing business in the UK, with 1,000 wanting to set up here for the first time.
Research by financial consultancy Bovill found that around two-thirds of the companies had no prior physical operations in Britain.
With the UK leaving the EU, financial services companies from the EEA are no longer permitted to market their services as they had previously and have to apply to be part of the FCA’s Temporary Permission Regime (TPR).
The TPR allows them to continue carrying out regulated activities for up to three years, during which time they must apply for full UK authorisation of their activities.
London still key
Despite fears that European cities such as Amsterdam will take business from the City, Mike Johnson, managing consultant at Bovill, said the numbers applying suggests London “is set to remain a key global financial centre”.
He added: “Many of these European firms will be opening offices for the first time, which is good news for UK professional advice firms across multiple industries including lawyers, accountants, consultants and recruiters.”
Bovill’s analysis of a FOI request to the FCA found that more than 400 insurance firms as well as more than 100 banks plan to move to or boost their presence in the UK.
The highest number of applications came from companies in Ireland, France and Germany which accounted for more than a third of the 1,476 applications for authorisation to do business in the UK.
Johnson warned European firms that obtaining an FCA licence is a complicated process. “The regulator is going to be very busy processing almost 1,500 applications over the next couple of years. The FCA should look to make their authorisation process as efficient as possible,” he said.
Politico recently reported that European firms looking to invest in the EU might get better protection by setting up in the UK.
Businesses in countries such as Germany warn they could move part of their operations to the UK to benefit from stronger legal protections when investing in EU countries where they don’t trust the courts of arbitration.
Stephan Wernicke, chief legal officer for the German Chambers of Industry and Commerce said there were “strong legal and economic arguments that EU companies will, following Brexit … launch bigger investments in certain EU member states only after having set up a [legal incorporation] in the UK”.
The Daily Telegraph has reported that British technology firms have raised more cash in 2020 than they did a year earlier and more than the rest of Europe combined.
Figures compiled for the government showed UK companies raised a record $15bn (£11bn) in 2020, slightly ahead of $14.8bn a year earlier.
The Telegraph also reported that a Lithuanian start-up is the first technology business to announce it would relocate to the UK following Brexit.
Ondato, which lets financial companies verify the identity of customers by analysing their face or printed documents, will move its headquarters to London.
“It's much more convenient to expand globally in a global hub rather than to sit in a not-as-obvious place,” said Adam Niewinski, a managing partner at investment firm OTB Ventures which backed Ondato.