When you think of global financial hubs, Dublin doesn’t immediately spring to mind. Indeed, it currently ranks 30th in the Z/Yen Group’s index of financial centers (pdf). But the Irish capital is poised to rise in the rankings, thanks to Brexit.
Since the UK voted to leave the European Union, Britain’s many financial firms have explored setting up new subsidiaries—or even moving headquarters—elsewhere in the bloc, in order to keep a foothold in the EU’s single market. This has set off a battle between European cities to try and tempt banks, insurers, funds and the like.
The minutes of the Irish central bank’s last meeting (pdf), in December, revealed the details of a roundtable discussion a deputy governor had in December with financial industry players. On the inbound interest from UK financial firms:
There had been significant levels of interest in authorisations sought for new businesses looking to relocate from the UK. The levels of interest were larger than had been initially anticipated.
Dublin is well positioned to attract Brexit-related relocations for several reasons, including that it’s a short hop from London, shares the same language, and levies some of the lowest tax rates in the Europe. That makes the city less of an underdog in the scramble for Brexit business against established EU financial hubs like Frankfurt, Luxembourg, and Paris.
But Dublin recently complained to the European Commission about the sharp tactics other cities are using to lure British firms. Eoghan Murphy, the minister in charge of promoting Dublin’s financial centre, told Reuters that the cities are being “very aggressive” to get banks and other financial firms to relocate, but Ireland isn’t interesting in “brass plating.” Rather than just setting up a token operation with a brass plate on the door, Dublin expects “the mind and management of the entity” to be in Ireland, according to the central bank minutes.
Banks in London have repeatedly warned that they will shift staff from London to elsewhere in EU in order to maintain their legal ability to provide services across the region. Some estimates from City lobby groups suggest that up to 70,000 financial services jobs may move away from London. British prime minister Theresa May tried to charm bankers in Davos into believing that the economic prospects for post-Brexit Britain are bright, but some have pressed on with their relocation plans regardless.
The size of London’s massive financial industry could make it hard for any other city, including Dublin (paywall), to cope with a big influx. Ireland’s central bank is struggling to hire and retain enough staff to deal with the potential growth in authorizations (and subsequent supervision) of relocated firms. At the end of 2016, the central bank had almost 100 fewer full-time staff than it was authorized to hire. It is trying to boost its headcount by another 10% this year, a target the governor has called a “challenging target.”
The central bank is not the only Irish institution straining to staff up after Brexit. Last year, there was a 40% increase in applications for Irish passports from Brits, which has led to extended waiting times.