Germany is the top destination for companies relocating due to Brexit: EY

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Global investors with operations in the U.K. looking to relocate have identified Germany as the top destination following Britain's decision to leave the European Union, according to the latest EY study.

Brexit has caused global investors to reassess their assets in the U.K., with 14 percent of foreign investors with a presence in the U.K. saying they now plan to change or relocate some of their European operations in the next three years should the U.K. leave the single market.

Germany was identified as the preferred destination for those investors moving out of the U.K. (54 percent), followed by the Netherlands (33 percent) and France (8 percent).

Already, seven in ten foreign investors say they have been impacted by Brexit, particularly with regards to operating margins, purchase costs and sales.

The financial services industry has been one of the hardest hit by the vote and remains the least optimistic about the outlook ahead. Just 12 percent say they anticipate strong growth while 6 percent are expecting to "slightly reduce" their existing presence in the region.

Earlier this month, UBS and HSBC warned that they could each move about 1,000 jobs out of the U.K. as they prepare for trading disruption.

According to EY's study, Brexit and European Union stability were cited as more fundamental concerns for financial services firms than for manufacturing firms.

The study also found global investors plan to grow their presence in Europe over the coming years despite recent geopolitical uncertainty that has dominated the region.

The findings in fact note an uptick in investor sentiment over the past year, and in particular since the U.K.'s shock Brexit vote, going some way in dispelling wider concerns about the impact of political upheaval on underlying investment behaviour.

EY's study of 254 global investors found that more than half – 56 percent – say they plan to grow their exposure to Europe over the next three years. This is up from May 2016, one month prior to Brexit, when just 36 percent of Europeans said they were optimistic about the future of Europe.

The results come as leadership races heat up in the Netherlands, France and Germany and Britain comes forward with greater details on its impending departure from the EU.

While not entirely unfazed by the political landscape, of greater concern to investors is volatility,particularly with regards to currencies, commodities and capital markets. 37 percent said these fluctuations posed the greatest risk to their investment decisions, while economic and political instability within the EU (excluding Brexit) worried 32 percent and Brexit itself concerned 28 percent.

Andy Baldwin, EY area managing partner for Europe, Middle East, India and Africa, said the findings were reassuring but warned against complacency.

"It is encouraging that the investors we are tracking continue to have strong investment appetite in Europe despite the instability and mixed geopolitical environment. However, investor patience is finite. Europe's historical investor appeal was built on certainty and predictability.

"Europe is in danger of developing an emerging market 'geopolitical risk profile' without commensurate returns. For the foreseeable future, pure economic factors will vie alongside political considerations in influencing final investment decisions."

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