The UK remains the most attractive place for foreign investment in financial services in Europe, despite the ongoing pressures of Brexit and the economic fallout from the coronavirus pandemic.
About 40% of investors believe the UK will be more desirable for foreigners pouring money into financial services after Covid-19, compared to 8% who said the same for Europe as a whole, according to consultancy firm EY. The US was the largest source of financial services investment into the UK, accounting for about a third of projects, it said.
Foreign banks oversee almost half of all banking assets in the UK, according to 2015 figures from the nation’s banking regulator. Yet the exodus from London to the continent has been far smaller than some expected after the Brexit vote, with firms moving about 1,000 people by last September, compared with EY’s prediction of 7,000 moves.
Omar Ali, UK financial services managing partner at EY, said the Brexit negotiations marked “a critical point in history for government, regulators and the industry” to safeguard the country’s financial sector.
London remained the dominant European city for foreign direct investment in 2019 with 67 projects, followed by Paris and Madrid with 29 and 24 respectively.
“While it’s unclear at this early stage how future projects will be impacted by the pandemic, investor sentiment from April this year suggests UK financial services is in a strong position to adapt to the changes,” said Ali.