EY Europe abandons London for Brussels before Brexit
Big Four firm EY has announced that it is shifting its legal entity from London to Brussels, ahead of Britain’s exit from the European Union. The move will bring the entity in line with continental auditing rules, while shielding it from changes in the recognition of professional qualifications between the UK and EU.
As the last grains of sand threaten to drop in the hourglass counting down to Brexit, a thick cloud of uncertainty still envelops the British economy. With the protracted divorce of the UK from the EU set to come to a head at the end of March, there is still no trade deal in place, and no sign that the political deadlock on the matter will be broken in Parliament before that looming deadline. While businesses largely remain upbeat about their individual prospects, most are nonetheless anticipating a period of sustained economic turbulence for the country at large.
While there is still no way to know exactly what Brexit will hold for citizens of the UK or Europe, or businesses on either side of that divide, it has become clear to many enterprises that they simply cannot afford to take a wait-and-see approach. In Autumn 2017, the Bank of England predicted this would eventually see up to 75,000 jobs in the financial sector alone up sticks from London and head to cities in the 27 surviving EU states. A year on, the central bank of the United Kingdom further warned as many as 5,000 roles would likely head for mainland Europe before the culmination of the Brexit process.
In this context, Frankfurt is largely seen as the most popular destination for firms looking to complement their UK operations, with professional services firms such as Raymond James and Projective opening offices in the German city. At the same time, however, Paris, Dublin, Madrid and Brussels have each been beneficiaries of the growing business ‘Brexodus’ which the UK and its international financial hub of London now face. The latest high-profile move concerning Brexit has seen Big Four firm EY shift its legal entity from London to Brussels, as the professional services giant braces for the UK’s secession from the bloc.
EY Europe, the UK-domiciled holding entity, was established in 2008, and its latest accounts for 2017 showed assets of £556,000, and a profit of £21,000. It does not provide any services, but instead pools voting rights from EY’s European entities. With its move to the mainland, it will form a new legal umbrella entity, EY Europe SCRL, which will manage around 40 firms across the continent. According to a release from EY, there will be no changes in leadership or relocation of employees as a result of the move.
Instead, the shift comes as more of a symbolic move, underwriting the Anglo-American origin firm’s uncertainty over the UK’s exit from the EU. EY Europe’s move to Brussels will also help put the firm in line with EU regulations, which say an audit firm must be licensed by an EU member state in order to control audit firms in other EU member states. Documents released by the Department for Exiting the European Union last year stated there would be no mutual recognition of professional qualifications for accountants in the event of a no-deal Brexit, a position which would see the country’s strong professional services sector hit especially hard.
