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HOT TOPIC


In a report over the summer, PA Consulting suggested Honda


and Toyota were “most at risk” of closing their plants because of Brexit. They are highly reliant on exports to Europe and have relatively low margins and profitability. “The question marks – Mini, Nissan and Vauxhall – are unknowns,”


said the report. But an analysis by LMC Automotive said GM’s Vauxhall plant was most vulnerable because of the relative ease of switching production to its German or Polish factories. LMC rated an exit by Honda, JLR, Nissan and Toyota as a low to medium risk.


Banking and financial services on the move? Yet the doubts surrounding the auto industry pale in comparison with those in the services sector, which accounts for more than three-quarters of the UK’s gross domestic product. In particular, the financial sector – which the City of London Corporation estimates contributed £66.5 billion to government coffers last year – has become immersed in speculation that major banks will be forced to relocate thousands of staff from London to the likes of Frankfurt, Dublin and Paris should Britain lose the ‘passporting rights’ that allow financial institutions in Britain to facilitate transactions across Europe. HSBC has already said it will move 1,000 staff from its London


HQ to Paris if the UK loses these rights in the Brexit negotiations, and Deutsche Bank is drawing up plans to shift staff to Germany. The Financial Times has reported that several other banks have begun to take action to shift operations out of Britain, with some


preparing to shift at least some work to cities such as Dublin, Paris and Frankfurt.” JPMorgan CEO Jamie Dimon has warned that the bank could


be forced to move up to 4,000 workers out of Britain, while Richard Gnodde, who jointly heads Goldman Sachs International, has not ruled out moving some, or even all, of the bank’s 6,500 UK staff members to Europe. But this is a double-edged sword, and analysts say that, with the


UK out of the EU, European banks will have to set up subsidiaries, forcing them to pump extra capital into the UK because much of European banks’ derivatives and wholesale-markets operations are based in London. Boston Consulting Group has warned that European banks will need to inject as much as €40 billion of capital into their UK operations to keep doing business in the country after Brexit. And many economists believe that, whatever arrangement the


UK reaches with the EU, London will remain – along with Wall Street – one of the two principal global financial hubs, simply because of the skills, knowledge and technical innovation available there. And, as one analyst put it, “Foreign bankers want to send their children to English schools.”


Implications for employee moves The notion of moving staff from one country to another, however, runs straight into the freedom-of-movement maelstrom. Indeed, banks and many other industries are worried about whether or not they will be able to keep existing EU citizens in the UK, just as so many Britons in Europe are wondering what the future holds. Ian Robinson, an immigration law expert


at Fragomen Worldwide and an adviser to the manufacturers’ organisation EEF, says that Brexit is likely to end free movement and will “have any number of implications for human resource teams across the country”. He adds, “Immigration is only one consideration but it is a reasonably big one, particularly with EU employees worrying about whether they will be told to leave the country. “It is unlikely that the government will


tell EU nationals to go home, but there can be no guarantees just yet. We do know that Mark Sedwill, the Permanent Secretary in charge of the Home Office, has said that those with permanent residence rights should be allowed to stay. “EU nationals can normally apply for


a Permanent Residence Card (PRC) after they’ve lived in the UK for five years, so long as they meet certain criteria, for instance a clean criminal record.


of London’s largest institutions approaching regulators to secure licences and lining up executives to relocate. “The big US banks – JPMorgan Chase, Goldman Sachs, Bank


of America, Citigroup and Morgan Stanley – have large operations employing tens of thousands of people in the UK. They have historically set up their regulated businesses in Britain and then used its right to ‘passport’ into the rest of the 28-member bloc,” the newspaper reported. “But lawyers are warning that after Brexit, they would likely need a new legal home base, so they are


There is no legal obligation to apply for the PRC, and the vast majority of EU nationals don’t bother. I am finding, though, that many are finding a lot of comfort in holding one since the referendum. “They can also apply for British citizenship if they have a PRC,


although they normally need to have lived here for six years. They also need to be of good character and meet a number of other relatively straightforward requirements. Again, this is not mandatory, but it could help people feel more secure.”


8 | Re:locate | Autumn 2016


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