This June marks ten years since the results of the Brexit referendum reverberated around the world. Britain’s decision to leave the European Union (EU), guided by a desire to retain sovereignty and control immigration more directly, was controversial.
In the leadup to this unprecedented event, speculation was rife. Commenters wondered whether we could ever replace our position in the European single market, if EU-owned companies would pull out of the UK, if GDP would fall by billions and thousands of Britons would be made jobless.
The financial services sector contributes almost 20% of the UK’s total service exports, with pre-Brexit speculation suggesting it would be one of the hardest-impacted areas. Ten years on from the referendum, we’ve taken a look at some of the predictions and how the real outlook compares for the financial services sector in 2026, with insight from David Foster, Managing Director at leading commercial finance provider, Anglo Scottish Finance…
The effect on GDP
There was little debate in 2016 about the impact that Brexit would have on the nation’s GDP, to which financial services contribute 8.8% (as of 2024). There was a clear understanding that the loss of free trading partners throughout Europe would have an immediate negative impact – though Brexiteers at the time believed it would be a short-term ‘shock’, while Remainers feared its long-term impact would drive the UK into recession.
“The result is somewhere in the middle”, says Foster, but ten years on, it seems clear that Brexit has made the UK economy as a whole smaller than it would’ve been otherwise – and the financial services sector is a microcosm of that.”
The export value of the UK’s total services sector saw a significant drop after the 2016 referendum, but this has been steadily recovering post-Covid. Financial services alone, however, has been particularly damaged, and continues to falter – though this decline did initially begin in 2014, it was exacerbated by the country’s removal from the EU.
Professor Jonathan Portes, of King’s College London, agrees, finding that: “Brexit did not cause an immediate recession. Nor did trade with Europe simply stop… the more important effect is cumulative: fewer firms trading, weaker investment, lower competitive pressure, less integration into European supply chains, and a reduced flow of knowledge and technology across borders.”
The real cost of the brain drain
Both before and after the referendum, many of the fears around Brexit’s negative impact were focused around financial services firms leaving the UK. Those fears seemed, at first to be well-founded: in the immediate aftermath of Brexit, 44% of the largest financial services firms in the UK planned to move part of their operations (and/or staff) to the EU.
The years between 2017 and 2021 were the worst for companies choosing to exit the UK. 37% of firms interviewed by researchers at Anglia Ruskin University planned to relocate in the event of a no-deal Brexit. A follow-up study in 2023 found that 84% of those had followed through with their plans.
In theory, this would mean thousands of UK roles moving abroad, leading to a severe talent deficit. An April 2016 study by PwC projected that Brexit could cost the financial sector as many as 100,000 jobs, while governmental estimates predicted 75,000 roles moving to the EU from the UK, some 7% of the industry total.
The reality was far less impactful – Brexit drove the migration of some 7,000 jobs out of the country – but still represented another negative effect of the referendum.
“Ten years on, however,” says Foster, “we’re continuing to see how novel impacts of Brexit are affecting employment in the financial sector. For one, Britain’s Gen Z talent is increasingly considering a move abroad in search of higher quality of living and lower costs. Many are citing Brexit as a key driver.”
Brexit has also resulted in fewer talented young people entering the country as international students. Starting from 2021, students from the EU choosing to study in the UK have had to pay significantly higher international fees, leading to an enrolment decline of 57% between 2020/21 and 2023/24. With top finance feeders like LSE, Imperial College and Oxford deprived of a continental talent pool, it’s easy to see how the financial services sector has lost a key talent pipeline.
London as a global capital
Fears abounded in 2016 about whether London would be able to retain its crowd as the European financial capital in the wake of the referendum. Frankfurt, home of the European Central Bank, was slated to benefit heavily from the brain drain, while Paris sought to target any bankers considering leaving London following the vote.
Brexit certainly called London’s long-term viability as a financial capital into question. The Economist notes how Amsterdam became Europe’s share-trading venue of choice, citing emerging banking hubs like Beijing, Shanghai and Dubai as further players aiming to muscle in on Brexit’s uncertainty.
“The limited extent of the brain drain means that London has retained its status as the financial capital of Europe, vying alongside New York to be the world’s foremost nexus and continuing to beat out Singapore,” Foster continues. Meanwhile, a KPMG study from March of this year showed that financial services leaders are committing an average of 21% of total revenue to London. In short, the capital is still where the world comes to do business – but where is that business going?
The trade outlook
At the time of the referendum, Britain’s international trade prospects were another key talking point, with Andrew Sentance, Senior Economic Adviser at PwC, noting Britain’s need to negotiate new trade agreements, “if our trading relationships with Europe and the rest of the world are disrupted by Brexit.”
Even so, there was widespread fear over whether the terms of Britain’s new trading agreements would be able to adequately replace our EU terms. Ultimately, the Trade and Cooperation Agreement (TCA), active from 1 January 2021, agreed the post-Brexit trading relationship between the UK and EU, while trade deals with non-EU countries, like Japan and Australia, were also set up.
The Office for Budget Responsibility (OBR)’s 2025 Economic and Fiscal Outlook discussed these agreements and their effect in comparison to Britain remaining in the UK. They found that:
- The TCA will reduce long-run productivity by 4% relative to remaining in the EU, thanks to increased non-tariff barriers on UK-EU trade acts as a result of Brexit
- Both imports and exports will be around 15% lower in the long run, relative to remaining in the EU
- Trade deals with non-EU-member countries will not have a material impact as deals concluded (so far) replicate existing deals that the UK benefitted from as an EU member state.
So, with these effects in mind, and the fact that the UK’s GDP growth was lower than the OECD, G7 and EU27 average between 2019 and 2022, it’s clear that Brexit has had a negative impact on the UK’s international trade prospects.
The outlook today
“Ten years on from the Brexit referendum, it is impossible to avoid the negative impact that leaving the European Union has had upon our financial services sector,” concludes Foster. “We’ve seen declines in GDP growth compared to all other projections, while the market share of UK financial services companies in many EU countries has fallen.”
“However, it’s also safe to say that the financial services sector has not been affected as strongly as pre-referendum predictions might have thought. Happily, predictions of 100,000 jobs being lost were far overblown, and London has retained its status as Europe’s financial capital – despite the fact that the city’s outlook seemed far worse in the years immediately following the referendum.
“Fintech innovation remains strong, despite diminished pipelines for top European talents into UK-headquartered companies, too – a testament to the strength of our financial sector’s pre-Brexit infrastructure. Without such established foundations, I expect the impact of Brexit would have delivered an even more significant and longer-lasting blow.”
