There's a hard rain coming for UK companies that trade with our European neighbours, and managers are doing their best to get ahead of it. Lloyd's of London, the specialist insurance market that has been in the storm business since the 17th century, has been an early mover. The company is to open a subsidiary office in Brussels, in the expectation that it will be operational by the industry's 2019 renewal season, with fewer than 100 staff expected to be based there (around a tenth of its total headcount).
Whether it is that simple may depend on tariff and regulatory considerations, such as what capital buffer needs to be within the trading bloc. But, importantly, the EU is just one destination for the global specialist insurance market. Last year Lloyd's transferred half of its managing agents to its Shanghai and Beijing platforms, and gained approval to open a reinsurance office in Mumbai.
Take Beazley (BEZ), which has six syndicates at Lloyd's and operations in Europe, the US, Latin America, Asia, the Middle East and Australia. Less than 5 per cent of the shipping and political insurance specialist's business is written in Europe, and it was already planning to develop its Dublin base to that end. It has applied for a direct insurance licence for the reinsurance outpost, which originally opened in the Irish capital in 2009.
Along with Luxembourg and Brussels, Dublin is set to win at London's expense - JPMorgan is in talks to buy an office there that could house 1,000 staff. These lost jobs will be part of the much-debated collateral damage from the Brexit vote. The financial and professional services employ 2.2m people in this country, and two-thirds of those live outside of the capital, according to the industry body TheCityUK. But while a collective move from the City can harm the UK economy, it does not necessarily follow that moving those jobs should substantially affect the performance of the listed institutions.
Expect the major banks to confirm their own distribution models in the months ahead - Lloyds Banking Group (LLOY) is reportedly considering turning its Berlin office into a full subsidiary, Barclays (BARC) is likely to rely on Dublin, HSBC (HSBA) on Paris. Again, the regulatory framework is the known unknown.
The airlines are dealing with their own headaches. EasyJet (EZJ) is applying for a certificate to operate inter-EU flights, lobbying for a UK-EU aviation agreement and planning a new base on the continent. There are just nine months until Ryanair (RYA) sets its summer 2019 schedule - it has warned, with a little drama, that there is a "distinct possibility" of flights halting between the UK and EU if a bilateral deal is not struck.
An EU operating company would need to have half its shareholder capital held by nationals - easyJet is there or thereabouts, but Ryanair has a smaller residual EU holding (around 34 per cent once UK holders are excluded). It does have the option of forcing investors to sell up, but is trying other measures first, according to our sister title the FT. All British Airways owner IAG (IAG) is saying is that it will continue to comply with ownership regulations: as a Spanish-registered parent company of Aer Lingus, BA, Iberia and Vueling, its special structure may yet afford it an advantage.
And that's just two or three sectors. As Brexit approaches, expect more companies to reveal similar hub-and-spoke structures for selling into the common market - and for policymakers to trample some underfoot.
