British firms in the financial sector are already moving assets to the mainland. More and more assets will be moved as the end of March comes near. The movement of financial assets is accompanied by relocating staff and occupying offices on the mainland.

There are several economic effects to be expected from the departure of financial assets from London. First, the network effects that the City has now, are probably diminished as the number of financial workers there drops, and increases on the mainland. The question remains though whether network effects will strongly increase on the mainland, as it seems that different locations (Frankfurt, Paris, Amsterdam, …) are chosen to relocate to. Second, a reversal of Brexit or Brexit Light might not mean that these assets come back. There are serious transaction costs involved to bring the assets back, from first relocating to the EU. That may hold companies back. Returning to London only seems feasible if these companies believe that their access to the EU stays guaranteed for a sufficient time when they are in the UK again.

Policymakers in the EU could look into strengthening network effects for the financial sector, to keep these assets on the mainland, regardless of how Brexit turns out. UK policymakers would best determine as soon as possible the extent of Brexit, to prevent relocations that would not have happened if clarity were offered earlier. The longer it stays unclear what Brexit the UK wants, the more assets will be shifted abroad, and the more irreversible Brexit, in practice, gets.