In the latest red flag for Hong Kong's faltering economy, nearly half the European businesses in the territory are planning to partially or completely leave within the next 12 months. A survey by the European Chamber of Commerce in Hong Kong (EuroCham HK) found that if restrictions under the Zero COVID strategy are not lifted or relaxed, 25% of businesses will fully relocate their Hong Kong operations, while another 24% will partially relocate. Only 17% said they would stay on under the current conditions.

The responding companies, which span a wide range of industries and sizes and in total employ a Hong Kong workforce of approximately 50,000, cited the difficulty in corporate and strategic planning caused by the restrictions. They also reported very high turnover within the last two years, with 51% saying they had seen 'unusually or very unusually high' staff turnover.

The findings further indicate that many of those who left were international staff who found the COVID restrictions too difficult to cope with - and companies are having trouble replacing them for the same reason. 67% of those companies that have been actively hiring said they have had difficulty bringing overseas talent into Hong Kong, because candidates were put off by the quarantine restrictions.

EuroCham HK released its survey findings just days after Hong Kong began to relax its border restrictions and some of its social distancing measures, suggesting that some of the companies may later decide to walk back their relocation plans. But the territory's economy, as well as its standing as a finance and trade hub for the region, has already been badly affected. Even before the pandemic, businesses and investors had been fleeing sociopolitical unrest, and in recent months, talent flight joined the exodus - top financial talent has been leaving for rival hub Singapore.