800 Billion Leaves UK for EU Is Not Really That Big A Deal

A recent survey by Ernst & Young (EY) shows that £800 billion has been sent to the EU from the UK since the referendum by financial services firms.

EY who track around 222 large UK financial service firms reported the figure and show companies uncertainty in Brexit and continue to get ready in case of a ‘No Deal’ decision.

Off the companies surveyed, 33% have said they will add staff in Europe and move a great proportion of their company operations to the EU.  As we get closer to a ‘Brexit No Deal decision this figure may rise even further.

Comment:

£800 billion is of course a huge amount of money, but it is not our money or lost money, it is money that is just passing through London that ‘the city’ makes a charge or turn on.  In the finance industry, if an institution is making say a 0.1% charge on any financial transaction, this equates to £800 million in lost revenue to ‘the city’. 

These numbers seem huge but when you think that up 75% of FTSE 100 ‘Fat Cat’ bosses already have salary packages worth say £5m pa, that’s £375m (if just the Chief Executive CEO alone is on such a big package).  What if 3 or 4 senior executives of each FTSE 100 company have this sort of package?  £800m is then ‘peanuts’.  

Put another way, from a taxes perspective, if HMRC was taxing that £800m lost revenue as profit alone, then at 19% corporation tax, that’s a loss in tax revenue of £152m.  Just about enough to buy 1.5 new F35 Fighter Aircraft for the RAF.  The UK has already committed to buy 135 x F35 fighters at £92m each, that’s £12 billion tax money spent (compared to £152m lost revenue of EU outflows). Let’s keep it real.  Brexit is going to be tough, there will be winners and losers but we just wanted to put the numbers in context for you before panic sets in.