Daniel Mahoney, head of economic research at the Centre for Policy Studies, says Yes.
Although Theresa May has provided a degree of clarity on the Brexit negotiations, remaining uncertainties mean that financial service firms will, inevitably, seek to implement some restructuring and contingency planning. Ireland is well placed to take advantage of this.
Ireland shares a common language and time zone with the UK, and is also home to the joint-lowest corporation tax in the EU. Moreover, while Ireland has a relatively flexible labour market that is attractive to business, many of its EU competitors impose punitive labour laws that discourage foreign direct investment. France, for example, has some of the most punitive employment legislation in the developed world.
However, the benefits for Ireland arising from a so-called “City Brexodus” will, in all likelihood, be small in macroeconomic terms. The City of London’s large network of financial and professional services would be hard, if not impossible, to replicate anywhere else in Europe, meaning that the City is set to continue as Europe’s financial powerhouse.
John Lehal, managing director of Insight Consulting Group, says No.
Barclays’ move doesn’t signal the start of an exodus from London. If Brexit sends the banks abroad, they are more likely to head to a city like Frankfurt or Paris.
Ireland is scarred by its experience in the 2008 crash. It might be willing to take on safe bets in insurance or asset management, but do regulators really want the risk of major trading houses? The answer is probably no. Credit Suisse took four years to get approval for just 40 trading jobs in Dublin. With the uncertainty of Brexit, banks will need a faster turnaround than that.
It’s also unclear if Dublin can accommodate the sector – just 6 per cent of office space there is vacant, and banks are big companies. If the financial sector leaves London, it will look to the global reach and influence at the European Central Bank held by France and Germany and not across the Irish Sea. How both countries can benefit from Brexit will feature heavily in their elections this year.