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Brexit clouds financial investment outlook in London: EY

London banking district

(Reuters) — London received the most foreign investment in financial services among European cities again last year, but the outlook for the U.K. capital has fallen to an all-time low due to Brexit, a survey from consultants EY said Friday.

Britain attracted 112 foreign direct investment, or FDI, projects in 2018 — with 27% from the United States — well ahead of Germany, in second place with 81 projects, EY said, giving no monetary value to total investments.

London, Europe’s biggest financial center, recorded 86 FDI projects, the most of any European city, and up from 47 in 2017.

Investor sentiment for the longer-term has fallen to an all-time low as continued uncertainty over Brexit takes its toll, EY said.

Nearly half of the 68 senior executives, chairs and presidents of financial firms in Britain and abroad polled by EY believe that Britain’s attractiveness will fall over the next three years.

“The main concerns investors have over the U.K.’s future prospects are loss of access to EU markets and restrictions on labor mobility,” EY said.

Investments in Europe overall reached 421 projects in 2018, the highest in a decade, EY said.

“This is in part a reflection of the market’s fragmentation as firms looked to set up a second EU headquarter in advance of Brexit,” EY said.

This could also explain why British investment in overseas projects rose 15% in 2018 to 62, the highest in a decade, with France the leading recipient, followed by Germany and Ireland, EY said.

Banks, insurers and asset managers using London as a gateway to the EU have opened hubs in Paris, Frankfurt and Dublin to avoid disruption to customers from Brexit.

EY said that 76% of global financial services investors were not changing their investment plans in Britain following the U.K. vote to leave the EU.



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