Which countries will attract UK businesses post-Brexit?

Cities in Europe and around the world have already begun competing for the attention of UK companies who are seeking to move all (or some) of their operations overseas in the wake of Brexit.

As the UK gears up to leave the European Union, a number of cities and countries are attracting interest from companies considering relocating their operations (or parts of their operations) after Brexit. European destinations competing for a piece of the action include Dublin, Paris, Frankfurt, Amsterdam, Luxembourg, Spain and Italy. Beyond Europe, Singapore, Australia, New York and Hong Kong are among the front-runners.As Lisa Johnson, global practice leader, consulting services, at Crown World Mobility, points out, for the UK to extract itself from the more than 40-year relationship with the UK will be neither quick nor easy. So far, the British government is rejecting the free movement of people, goods, capital and services. While the process of Brexit may take at least two years, the business community is already responding.Ms Johnson goes on to make an interesting point. “There are many parts of the world where there is political instability, but this year it is the two countries that are consistently at the top of the list in terms of value of international outbound and receiving locations, the US and the UK, which are undergoing political transitions that are creating uncertainty for many companies doing global business.

Gathering relevant information

For companies considering a move, Mercer’s annual Quality of Living survey, which helps multinational companies to compensate employees fairly when sending them on international assignments, provides a wealth of useful data, including information on city infrastructure.Slagin Parakatil, principal at Mercer, is responsible for the research. “A city’s infrastructure – or rather the lack thereof – can considerably affect the quality of living that expatriates and their families experience on a daily basis. Access to a variety of transport options, being connected locally and internationally, and access to electricity and drinkable water are among the essential needs of expatriates arriving in a new location on assignment. A well-developed infrastructure can also be a key competitive advantage for cities and municipalities trying to attract multinational companies, talent, and foreign investments.”

Dublin

Hays 2016 Global Skills Index:

Pluses for companies:
  • Very low corporate tax rate
  • Flexible, buoyant labour market
  • Businesses generally optimistic
  • Schemes to encourage Irish professionals who have been working overseas to return
Minuses for companies:
  • Talent mismatch
  • Skills shortages prevalent across IT, construction (including surveyors, engineers and architects), life sciences, technology 

Madrid

Cartus 2016 Global Mobility Policy and Practices Survey: Spain No 10 in list of new countries to which employers have been sending assignees over the past two years. Immigration a challenge.

Beatriz Carro de Prada, BRS Relocation Services: “Challenges for employees include bureaucracy and obtaining places in international schools. Planning ahead and assistance from relocation experts with local knowledge are vital.”

Amsterdam

Annebet van Mameren, education consultant: “Expatcenters provide a one-stop service for international talent. They help with residence and work permits (including start-up visas), registration with the municipality, the 30 per cent tax ruling, and many other official matters.

“There are currently nine Expatcenters in the Netherlands, in locations that include Amsterdam, Rotterdam, Leiden and The Hague. In 2016, the Amsterdam centre had its busiest year since it opened in 2008. The number of British visitors has increased considerably as a result of the Brexit vote.”

Luxembourg

Tina Ling, MD, Hays France and Benelux: “Last year, Luxembourg achieved economic growth of 4.8 per cent, almost three times the amount of total European growth over the same period. This is impressive considering the country has faced multiple challenges: the automatic exchange of tax matters, an increase in VAT, and loss of revenue related to e-commerce.“From an employment point of view, the performance is good, with growth of 2.5 per cent representing a net creation of 8,500 jobs. Nevertheless, the unemployment rate remains high at 6.3 per cent, creating structural unemployment thanks to a mismatch between skills available and those the labour market needs.”

Frankfurt

Cartus 2016 Global Mobility Policy and Practices Survey: Langauge a challenge for assignees.

Klaus Breitschopf, MD, Hays Germany: “There is high demand for combining IT with engineering, as well as IT security and big-data experts. Germany needs more flexible forms of employment, such as freelancers for project work. The German government doesn’t yet recognise this need and currently regulates the labour market without differentiating between specialists and blue-collar workers.”

Paris

Cartus 2016 Global Mobility Policy and Practices Survey: France joint No 8 in list of countries currently presenting greatest mobility challenge for respondents’ organisations.Challenges for assignees:
  • High social taxes
  • Complex equity taxation
Tina Ling, MD, Hays France and Benelux: “France experienced vigorous economic activity in the first quarter of 2016, and growth is expected to be 1.4 per cent this year … The labour market is already taking advantage of recent government support for the employment market, including easier access to regulated professions and reduced labour costs, which will likely result in a beneficial competitive environment.”

Milan

Cartus 2016 Global Mobility Policy and Practices Survey: Italy No 5 in list of countries currently presenting greatest mobility challenge for respondents’ organisations.Challenges for companies/employees:
  • Immigration requirements
  • Lengthy work-permit process
  • Driving regulations
  • Tax
Carlos Soave, MD, Hays Italy: “Pressures within the financial sector and weak global demand present a risk to Italy’s growth ambitions. With the Job Act’s reform in place, the economy is growing and jobs are being created. While at first this seems to be very encouraging news, it is still too early to measure its impact and time will tell whether the Act is a true success or not.
Related news:

Beyond Europe

Kate Fitzpatrick, Mercer’s global mobility practice leader for the UK and Ireland, makes the point that, Brexit notwithstanding, all UK cities remain attractive locations for multinational companies and their employees, as they continue to rank highly for quality of living.“London leads the pack,” she says, “in both the overall quality of living and this year’s supplementary city infrastructure ranking, with its multiple international airports and a large and comprehensive public transport network. The capital’s only downfall in regard to infrastructure is heavy traffic congestion, which also contributes to the city’s low score for air quality and pollution.”Despite increased political and financial volatility in Europe, many of its cities offer the world’s highest quality of living and remain attractive destinations for expanding business operations and sending expatriates on assignment, according to the survey. Of the cities examined in this article, Frankfurt takes seventh place for overall quality of living and joint second (with Munich) for city infrastructure.Beyond Europe, Australia continues to rank highly for quality of living, with Sydney in tenth place and Melbourne in 16th. Sydney is ranked eighth for infrastructure. Singapore remains the highest-ranking city in the Asia-Pacific region, taking first place for city infrastructure and 25th for overall quality of living. Hong Kong is at No 71, and New York at No 44.We’ll be covering the locations mentioned in this article on relocateglobal.com and in future issues of Relocate magazine.

Singapore

Cartus 2016 Global Mobility Policy and Practices Survey: Singapore No 4 in list of top destinations and No 5 in list of new countries to which employers have been sending assignees over the past two years. Cost of living a challenge for employees.Lynne Roeder, MD, Hays Singapore: “A popular choice as a strategic regional hub for multinational corporations looking to expand in Asia, particularly Southeast Asia. With IT, life sciences, and banking and financial services as major driving forces behind a highly active recruitment market, businesses continue to display positive, albeit more cautious, hiring sentiments. Temporary and contract roles are increasingly prevalent solutions to work around headcount limitations. While overall wage pressure has decreased slightly in comparison with 2015, the local talent pool remains tight in high-skilled industries, placing upward wage pressure on roles in demand as employers seek to attract and retain talent.”

Hong Kong

Cartus 2016 Global Mobility Policy and Practices Survey: Hong Kong No 6 in list of top destinations.Dean Stallard, regional director, Hays Hong Kong: “Being an open economy, Hong Kong can be susceptible to external factors. This is highlighted by slower GDP growth due to current global economic conditions, particularly in China. Hong Kong’s position as a leading global financial sector and regional hub remains stable, with continuous candidate demand and vacancy activity indicating positive business sentiment.“While overall wage pressures have eased slightly in comparison with 2015, talent shortages and increasing regulations have resulted in a tightening in the labour market, and employers must be flexible and innovative to attract top talent.”

Australia

Cartus 2016 Global Mobility Policy and Practices Survey: Australia No 3 in list of new countries to which employers have been sending assignees over the past two years.Challenges:
  • Demanding and paper-intensive immigration process
  • Hard to establish corporate registration
Nick Deligiannis, MD, Hays Australia: “Australia’s economy is undergoing structural change as it successfully transitions from mining to the services sectors, particularly health, retail, tourism and education. Headcounts are growing, market buoyancy is evident, and employers report increased business activity. Given this sentiment, you’d expect commensurate salary pressure; however, employers instead remain cost-conscious. It remains to be seen how long this anomaly will last; already, turnover is rising and the shortage of candidates in certain high-skill industries is leading to some wage pressure. While far from a universal trend, this suggests that employers must not be complacent in the face of increasing skills shortages.”

New York

Cartus 2016 Global Mobility Policy and Practices Survey: US again top destination. No 4 in list of countries currently presenting greatest mobility challenge for respondents’ organisations. Immigration a key challenge.Dan Rodriguez, MD, Hays USA: “As the economy improves for another quarter in a row, we are seeing increased job creation and higher wages. Labour-force participation has increased; however, we are not seeing that translate into reduced skills shortages. There is a talent mismatch, so employers are still struggling to fill niche roles, while some jobseekers are struggling to find a suitable role.“The country’s busiest sectors, such as construction, IT and technology, banking and financial, and life sciences, are experiencing talent shortages that challenge productivity and growth. The 2016 election result will have a significant impact on the federal economy but it will be some time before we know the full ramifications.”

For related news and features, visit our Brexit section.

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