Mobility professionals are used to constant changes of the geographical environment, sudden arrivals as well as unexpected departures of people, families and large groups.
On 23rd of June, however, the British Referendum results indicating that the majority of the Brits wanted to leave the EU were more than a surprise. The expected political, economic and financial consequences for the UK and the European Union are tremendous and will have an important impact on workforce mobility between the UK and a number of European cities.
What is the status quo two months after this far-reaching vote in favour of the Brexit?
After the announcement of the results of the referendum, the British Pound fell to it’s lowest level since 1985 and the UK Prime Minister has changed.
Although Theresa May declared that Article 50 would only be triggered in 2017, her current position “Brexit means Brexit“ leaves no room for doubt as to her determination to carefully fullfil her task.
What are the current reactions of economic and political stakeholders and investors?
Management Mobility Consulting just came back from a trip to the UK. We had the opportunity to talk to stakeholders from the relocation industry, mobility mangers from financial institutions, multinationals and NGOs in France, Luxembourg and Germany.
The overall reaction at this stage can be characterized by a high level of uncertainty.
Foreign investors lost their trust in the future of the property market. Prime central London property prices have fallen at the fasted rate since the end of 2009. Since the referendum a price decrease of 1 000 British Pounds per day can be observed in London.
We also noticed a higher interest of private people from the UK inquiering about options of emigrating to other countries in Europe as well as British expatriates applying for German, Irish, Spanish or Cypriot passports.
A number of companies have developped their exit strategies but not yet communicated to the public. They are in the starting blocks to leave the UK, others will follow suite as soon as Article 50 will be triggererd. Even if the announced numbers of transfers ranging between 40 000 – 100 000 people may be overestimated, the feasibility of these moves in terms of logistics, housing and schooling should be carefully checked as facilities are not unlimited in the new destinations.
As indicated by the Financial Times, there is a « huge first mover advantage », not only for logistic reasons but also in terms of regulations. EU regulators are expected to be overwhelmed by the increase of workload and may treat the request on a « first come first serve » basis.
There are various speculations about the impact on other European locations and major destinations of future relocations from London. It is rather unlikely that one single destination will absorb all moves from the UK and replace the City. Depending on the industry sector and the particular needs, the departure flood will most likely be shared between several destinations. On the top of the “exit list“ are currently Paris, Frankfurt and Luxembourg as top locations for the banking sector, Dublin as English-speaking option attracting US companies and Berlin. The German capital is particularly interesting for private investors from Russia, China and some Gulf States. Berlin is also considered as the future European fintech centre. According to the International Financial Times, more than 100 fintech companies are considering relocating their offices to Berlin.
What steps should employers take now?
Employers should start how to analyse the impact on their workforce mobility. Even if there are many unknown elements, some practical steps should be taken quickly in order to be prepared.
- Plan your communication strategy
One of the key issue is communication. Expatriates and their families may be concerned by their personal situation. In order to avoid speculations, set up a communication strategy and start talking to your staff about possible implications.
- Conduct an audit of your workforce
Check how many EU nationals are currently working for your group in the UK and how many UK nationals you employee in other European countries. Your checks should include information about each transferee’s location, the duration of their stay and the date on which they can apply for permanent residency depending on the country of destination. The related costs should be analysed and it should be considered including a paragraph in your mobility policy to make clear if these costs will be taken over by the employer and under which conditions.
- Plan for changes concerning recuitment and retention measures
The referendum may have an impact on future recruitment and retention. It may be more time consuming to find new employees in the future and to retain talent. These difficulties may require additional measures of talent attraction, such as individual assistance offered to the spouse, coaching or new job models.
- Anticipate early returns
EU nationals working in the UK or British transferees employed in other EU countries may wish to return to their home countries. It may be helpful to set up internal guidelines how to handle this type of requests.
- Be prepared for future group moves
Anticipate logistics concerning possible group moves from and to the UK. Depending on the particular situation of your company, it may be necessary to find office space to accommodate people as well as housing, schooling and administrative assistance.