Twice as many UK unicorns cutting jobs compared to EU counterparts

New analysis by the UK Trade and Business Commission (UKTBC) reveals that the UK’s most valuable fintech companies have been more badly impacted by staff layoffs in the past year, compared to their EU based counterparts.

Of the world’s 334 fintech ‘unicorns’, startups valued at $1bn or more, 25 are based in the UK and 28 are in the EU. Thirteen (52%) UK-based fintech ‘unicorns’ have announced significant layoffs in the 12 months since March 2022 while just six (21%) of those based in EU member states experienced similar redundancies in the same period.

The research comes alongside an expert’s warning to the UKTBC’s fintech and finance session on Thursday that fintech companies are increasingly choosing to stage their initial public offerings (IPO) in Paris, Amsterdam, and New York rather than the UK, which could see the UK outcompeted for future investment. Another witness told the UKTBC that regulatory “uncertainty” following Brexit was seriously challenging the UK’s fintech sector.

Evidence already submitted to the UKTBC cites concerns that the UK’s financial services trade with the EU, which fell by 19% in terms of cash exports from 2018-21, could be further impacted when the last of the two equivalence decisions granted to the UK by the EU expires in 2025. Conversely, the EU has granted 21 of these decisions to the United States. 

Since Brexit, over £900bn in assets have been transferred out of the UK, representing a tenth of the whole UK financial sector. Likewise, 45% of the UK’s largest financial services firms have relocated wholly or partially to the EU since 2016, alongside over 7,000 staff. 

Earlier this month, Lloyd’s of London CEO John Neal warned that the economic chaos unleashed last year by Liz Truss’s mini-budget had undermined the UK’s reputation for economic stability and hurt future investment prospects.

Dr Sarah Hall, Senior Fellow at UK in a Changing Europe, said:

“The City has many strengths as an international financial centre but it is important that the Government works to develop regulation that continues to support the ongoing growth of businesses and fintech across the UK in the future."

“Above all else, businesses need as much certainty as possible as they cope with challenging global conditions.”

Peter Cunnane, Director of International & National Initiatives at Innovate Finance, said:

“It’s the IPO piece…how attractive are we making it for companies to list here? Unfortunately, we have fallen behind against New York, against Amsterdam, against Paris, where companies are finding it easier to list these days in this space. 

“That concerns us because then if we lose one or two of those unicorns, the whole pack of cards seems to start to disintegrate.”

Peter Norris, Virgin Group chair and co-convenor of the UK Trade and Business Commission, said: 

“Reports that the UK’s fintech sector is less able to retain talent than their EU counterparts betray the Prime Minister’s promise for an innovative, tech-driven economy.

“The Government must get real about the pressures facing the UK’s fintech sector and work to repair our economic relationships and reputation as a global centre for finance.”