Germany and the Netherlands have emerged as the preferred destinations for investors planning to move out of the UK in the next three years should the country leave the European single market, according to a new survey by advisory firm EY.
Germany accounted for 54% of the respondents, followed by the Netherlands with 33%. France lagged with just 8%.
Around 14% of foreign investors with a presence in the UK plan to change or relocate some of their European operations in the next three years should Brexit eventuate. Overall, 11% plan to modify their UK presence in Europe following Brexit, the study found.
Heightened geographic and political risks across Europe and the UK are prompting 1 in 10 companies with a presence in Europe to review their geographical footprint. However, the survey found that the UK’s EU referendum result is a far bigger concern for foreign companies established in the UK (33%), compared with those that are not (15%).
Companies not established in the UK cite geopolitical and wider EU instability (31%), coupled with the slowdown in trade flows (30%) as more urgent concerns.
Brexit impact on financial services, technology and mid-sized companies
The technology sector is leading growth into Europe with 72% of respondents planning to invest in Europe in the next three years, and of those, 33% expecting to grow their presence significantly. Europe is seen particularly as a powerhouse in emerging technologies such as artificial intelligence (IA), the Internet of Things (IoT) and robotics.
Mid-sized companies are also driving growth, with more than two-thirds expecting to grow their presence in Europe and 26% planning significant expansion.
By contrast, financial services companies are the least optimistic about their growth prospects in Europe over the next three years: only 12% anticipate strong growth, while 6% expect to 'slightly reduce' their existing presence in the region. Financial services firms are also nearly twice as likely as manufacturing firms to identify EU instability (51%) and Brexit (41%) among the top three growth risks, with volatility seen as a much less severe risk.
Earlier this week the German banking authority Bafin held a meeting for banks with UK activities to update them on local regulations and supervision.
HSBC, UBS and Barclays have all indicated they will move their activities to the Continent should Brexit go ahead with Frankfurt (pictured), Paris and the Irish capital Dublin respectively their preferred destination.