If you watched the news at all over the last few weeks you’ll have heard a succession of companies announce they will be moving jobs from the UK to the European Union unless they have full access to the single market and in some cases even if they do.
Many people have criticised companies for making these announcements, claiming it undermines consumer confidence others don’t understand why when we have “two years before we leave the EU” they’re making these announcements now.
In this post I take a look at which companies are making announcements, why and what it means for all of us.
Which companies are making announcements about moving jobs?
The list of companies making these announcements is growing every day but so far VodaFone, JP Morgan Chase, Citi, Easyjey and Goldman Sachs are some of the most widely reported. I will explain the particular reasons there are so many financial institutions listed in a separate post.
Why are they making these announcements?
The companies are making it clear to their investors that they will protect their revenues and access to the European markets to minimise the impact of the UK’s referendum result to leave the EU.
This is more important for those companies that either trade across borders in the EU currently using the banking “passport” rules or generate the majority of their revenue from the EU market outside the UK.
But it’s at least two years before the UK leaves the EU?
The problem is investors, lenders and customers are looking for certainty now and waiting two years or more for the UK to decide what kind trade deal it wants, let alone deliver it, would be commercial suicide for them so they have to move now.
Don’t these announcements damage the UK economy and these companies brands?
There is an argument that bad economic news damages the economy and increases the risk of recession as essentially recessions are caused when businesses and individuals reduce their spending so consumer sentiment (how confident people are about the future) is very important.
These announcements will understandably cause the concern among consumers which may cause damage to these companies UK business and temporarily impact their brand value in the UK.
The companies making these announcements are not making them lightly, they are making them to ensure their businesses survive and they can continue to raise money and give their customers across the EU confidence that they will continue to be there to serve them. This is critically important as if customers in other countries believe suppliers will not be able to serve them in future they will begin to change suppliers to those that they have more confidence in.
This isn’t because the businesses have any political point of view and there may be short term pain for them in the UK however if they’re taking these steps then it’s generally because they gain more of their revenue from the 27 other EU countries than their home market so the risk of them not speaking is significantly higher than the potential risk of making the announcements.
What do you think?
Do you have a different view, or further questions please let us know by commenting below.
Sources and Further Reading
- The EU single market: How it works and the benefits it offers – Financial Times
- Vodafone hints at relocation from UK – The Register
- Vodafone could move London HQ outside UK post-Brexit – BBC News
- Banks begin moving some operations out of Britain – Financial Times
- These Companies Are Already Threatening to Move Jobs Out of the UK – Fortune
- Vodafone is threatening to move UK jobs to the EU, and Goldman says banking jobs could go – Business Insider
- These firms could be moving jobs out of the UK – CNBC
- Vodafone among firms that may move HQs from post-Brexit UK