What is Brexodus
Brexodus, a compound of "Brexit" and "Exodus," refers to the mass exit of individuals (particularly European Union (EU) nationals) and corporations from the United Kingdom, which some observers expect to occur when the country leaves the EU.
History of Brexodus
The UK decided to leave the EU following a referendum held on June 23, 2016. This departure, Brexit, is expected to occur at the end of March 2019. The withdrawal is likely to have profound effects on individuals and businesses, but the exact implications are uncertain. Negotiations between Britain and the EU began on June 19, 2017, and have not yet provided clarity for EU nationals living in the UK, British nationals living in the EU or corporations that do business across the English channel.
The process is complicated by domestic politics in the United Kingdom. In an election on June 8, which Conservative Prime Minister Theresa May called in an attempt to increase her parliamentary representation, the Conservatives lost their majority. The result, which pushed May into a coalition with Northern Ireland's Democratic Union Party, raises questions about her push for a "hard Brexit," under which the U.K. would leave the EU's single market and customs union and would dramatically curb immigration from the EU.
According to Migration Watch UK, which supports a stricter British immigration policy, 3.3 million EU nationals live in Britain while 1.2 million UK nationals live in the EU. Europeans living in Britain worry about their status, since immigration is a politically fraught issue in the United Kingdom. This friction is one reason for "Brexodus," which could result from a deal – or lack of a deal – that sees EU nationals lose rights and status they currently enjoy in Britain.
Due to the uncertainty surrounding their future status, 47% of highly skilled EU workers told Deloitte in June 2017 that they were considering leaving the country within five years. The majority (52%) said that their employers had not communicated with them effectively regarding Brexit.
In March 2017, the House of Lords attempted to guarantee the rights of EU citizens living in the UK, but the Conservative-controlled Commons struck the provision down. In June, May outlined a plan that would grant EU citizens "settled status," giving those who had lived in Britain for five years the right to remain indefinitely and equal access to benefits and public services. Those who have been in the country for less time would be able to apply for temporary residence.
The proposal, which the government characterized as "generous" before its release, was not well received in the EU in part because May did not specify a cutoff date for the five-year period. Michel Barnier, the EU's chief Brexit negotiator, tweeted that Britain's position needs "more ambition, clarity and guarantees," saying his goal was for EU residents in Britain to continue enjoying the same rights as today.
EU nationals would need to join what the Guardian calls a "special ID register" to gain settled status. The application process is likely to be tedious, and the onus is placed on EU citizens to prove five years of residence.
Part of the reason for the expected "Brexodus" of individual EU citizens is the potential for businesses to leave the UK due to Brexit, particularly financial services firms such as banks, insurers and asset managers. These firms have used London as a headquarters from which to serve the EU, since "passporting" arrangements allow them to operate across the bloc without setting up local subsidiaries.
After Brexit, financial firms based in Britain may lose this ability. Several have called for a temporary agreement granting them access to the EU's single market past March 2019. These firms need time to plan, however, and cannot risk losing access to European markets due to a hard Brexit. For this reason, some firms have announced plans to move operations to the EU while others are considering their options. Paris, Berlin, Frankfurt and Dublin are competing to present themselves as the best alternatives to London. These cities are also lobbying Brussels to limit euro clearing, most of which currently occurs in Britain, to the EU.
JPMorgan Chase & Co. said in May that it would move hundreds of London-based jobs to Dublin, Frankfurt and Luxembourg. Deutsche Bank AG has announced that it will move 4,000 jobs out of London. Daiwa Securities Group Inc., a Japanese brokerage, will set up a subsidiary in Frankfurt. Goldman Sachs Group Inc. is considering moving up to 1,000 jobs to the German city, while Bank of America Corp. and Barclays PLC are considering Dublin.