Irish Minister Sees Wave of Brexit Relocations by Mid-2017by
‘Prudence dictates’ companies take decisions, Murphy says
Ireland’s financial services minister speaks in interview
The prospect of losing access to the European Union’s single market should prompt a wave of U.K.-based financial services companies to announce full or partial relocations to Ireland by mid-2017, said Ireland’s minister in charge of finance services.
Financial companies “have been coming by and meeting with me, and other ministers and the central bank and making preliminary inquiries into office space and staff,” Eoghan Murphy, minister of state at the Department of Finance, said in an interview in Hong Kong. “We think the first concrete decisions in terms of communications to the public are going to be Q1 and Q2” of this year.
He declined to name any of the companies that are in talks to relocate with Ireland’s government, though he said they include U.S. and Japanese firms.
British Prime Minister Theresa May is expected to say in a speech later Tuesday that she expects the U.K. will pull out of the European Union’s single market for goods and services and seek a completely new trading relationship with the bloc. Leaving the single market will be a disappointment for banks, many of which had pleaded for a so-called “soft Brexit” that would somehow preserve as much access as possible to the single European market.
“It seems clear from the European Union side, that you cannot have the benefit of membership if you aren’t a member,” said Murphy. “That is going to pose challenges for people who are operating in the single market from the U.K. at the moment.”
Murphy said that because it may take two years to get authorization to move businesses “prudence dictates that you have got to make some sort of strategic decision and move out of the U.K. to protect” single market access.
The expected negotiations with the EU’s remaining 27 members could become disorderly, which in turn could threaten the stability of the global financial system, Murphy said. U.K. based banking executives this month called on May to negotiate a transitional agreement to protect London financial companies.
“If there is a bad period of negotiations, or talks break down and it is not that clear, that lack of clarity poses huge risks for the financial system,” said Murphy. “That puts the importance of a transitional arrangement at center stage.”
The Irish government will keep its plans to sell a stake in Allied Irish Banks Plc under review, Murphy said. "There are no pressures on the government side to IPO at a particular point of time," he said. “We’ll wait and see how 2017 evolves.”
Murphy was visiting Hong Kong to promote Ireland as a location for financial services companies.