The prospect of losing access to the European Union's single market should prompt a wave of UK-based financial services companies to announce full or partial relocations to Ireland by mid-2017, Minister of State Eoghan Murphy has said.
Financial companies "have been coming by and meeting with me, and other Ministers and the Central Bank and making preliminary inquiries into office space and staff," Mr Murphy, Minister of State at the Department of Finance, said in an interview in Hong Kong.
“We think the first concrete decisions in terms of communications to the public are going to be in the first quarter and second quarter” of this year,” he said.
He declined to name companies that are in relocation talks with the Government, though he said they include US and Japanese firms.
The British prime minister, Theresa May, is expected to say in a speech on Tuesday that she expects the UK will pull out of the EU's single market for goods and services and seek a completely new trading relationship with the bloc.
Leaving the single market will be a disappointment for banks, many of which have pleaded for a so-called “soft Brexit” that would somehow preserve as much access as possible to the single European market.
"It seems clear from the European Union side, that you cannot have the benefit of membership if you aren't a member,"said Mr Murphy. "That is going to pose challenges for people who are operating in the single market from the UK at the moment."
Strategic decision
Because it may take two years for authorisation to move a business, he said, “prudence dictates that you have got to make some sort of strategic decision and move out of the UK” to protect single market access.
The expected negotiations with the EU’s remaining 27 members states could become disorderly, which in turn could threaten the stability of the global financial system, Mr Murphy said.
UK-based banking executives this month called on Ms May to negotiate a transitional agreement to protect London financial companies.
“If there is a bad period of negotiations, or talks break down and it is not that clear, that lack of clarity poses huge risks for the financial system,” said Mr Murphy. “That puts the importance of a transitional arrangement at centre stage.”
The Irish Government will also keep its plans to sell a stake in AIB under review, the Minister said. "There are no pressures on the government side to IPO at a particular point of time. We'll wait and see how 2017 evolves."
Mr Murphy was visiting Hong Kong to promote Ireland as a location for financial services companies.
