Brexit could drive fintech firms out of the UK
BREXIT could drive fintech firms out of the UK, a House of Lords committee has warned.
Anticipated restrictions on free movement of people could cause a skills shortage and prompt entrepreneurs to set up elsewhere, according to the report from the House of Lords’ EU select committee on Brexit and financial services.
The report said that the fintech sector relies on foreign staff to a greater degree than the wider financial services sector and so would be more acutely affected by the smaller talent pool.
Read more: No Bregrets – How P2P is dealing with Brexit
It cited Daniel Morgan, head of policy and regulation at Innovate Finance, who said that 30 per cent of the founders of the fintech trade body’s start-up member base were born overseas.
“Many of our founders came here just with an idea, and with a smaller labour pool that talent will no longer gravitate here,” he said.
The report also cited Giles Andrews, chairman at Zopa, who told the committee that half his workforce was from outside the UK, mainly from the EU. He said that he was “already finding less desire among bright eastern Europeans, Germans and French people to come and work in the UK”.
Fintech contributes an estimated £20bn in annual revenues to the UK’s £200bn financial services sector.
Read more: Brexit weighs on UK fintech investment
“The fintech industry has thrived in London, but could potentially move elsewhere,” said the report. “We note the concerns of the industry over future adherence to the EU data protection regime, and over its ability to recruit adequately qualified staff, and to attract the entrepreneurial talent needed for innovative start-ups.
“The government should be particularly mindful of the opportunities for fintech to develop further in the UK and of the effects of Brexit on a promising industry.”
The report suggested that the government should implement a Brexit transition period to provide stability to the financial services sector.