London Employment Monitor November 2016 highlights:
With the Christmas and bonus seasons looming, City jobs were down an unsurprising 14% month-on-month. Year-on-year figures paint a more remarkable picture, however, with a 6% increase.
“This is the first post-Brexit year-on-year increase in jobs that we’ve seen”, said Hakan Enver, Operations Director, Morgan McKinley Financial Services. “Heading into the New Year with a higher base of jobs compared to last year, bodes well for City employment in 2017”. What is evident is that the gradual decline in jobs during H2 2016 has been less aggressive versus what was seen in the same period in 2015.
Job seekers were down 9% month-on-month, but increased by 16% year-on-year. “Redundancy numbers are up, so a spike in job seekers is to be expected”, said Enver. “At Morgan McKinley, we’ve also seen a surge in top talent registering with us to consider European opportunities”.
With 13,500 British companies facing the loss of passporting rights, the implications for workers are potentially devastating. A recent survey conducted by Morgan McKinley found that of those working in key City industries, 68% consider the vote to leave the EU the wrong decision and 62% would consider moving abroad to pursue professional opportunities. Mainland Europe was by far the most favoured relocation destination.
“In this day and age you may have to be willing to relocate to have a successful career”, said Enver. “In the event of a hard Brexit, professionals will have to consider putting their careers ahead of geographic preferences and in so doing, economic growth could stall by five to ten years”.
In an effort to thwart such a large-scale brain drain, London Mayor Sadiq Khan is considering a London specific Brexit that would protect the freedom of non-British nationals to work in the capital. "If the government ignores the needs of business and pushes ahead with a new system that cuts off access to skilled workers, then we will have no choice but to look at a London-specific solution”, said Khan.
Pressure from the Remain camp to maintain freedom of movement and passporting rights remains strong, while impatience from those who favor a hard Brexit is reaching boiling point. Despite the pressure from both sides of the debate, the government is taking no decisive steps toward either direction, sowing more seeds of confusion.
“The government appears to be stalling for time to see what a shifting European political landscape will look like in 2017”, said Enver. “If anti-EU sentiment drives voters in France and Germany as it has in Britain and Italy, there may be no EU left to exit in a few years”.
“With the focus on Brexit, it’s easy to lose sight of the fact that the grass is not much greener on the other side of the channel tunnel”, concluded Enver. “If France or Italy were to leave the Eurozone it would collapse and we’d be reliving 2008 all over again”.
Even without a worst case scenario, Europe’s already lacklustre economy stands to be devastated by a hard Brexit. According to a leaked EY report, corporate behemoths like Airbus expect a hard Brexit to hurt their capital-raising abilities.
Results of the Bank of England’s 2016 stress test were released in late November, revealing some systemic weaknesses. The Royal Bank of Scotland performed worst among the seven lenders and must now submit a revised capital plan.
Though stress tests can only measure financial institutions’ responses to known scenarios as opposed to unforeseeable ones, they play a significant role in the planning and allocation of resources. “Poor stress test performances always hit employment figures, because with spending cuts come job cuts”, said Enver.
According to independent analysis of Chancellor Philip Hammond’s Autumn Statement, the outlook for wage growth is “dreadful” for the coming decade. Eight out of ten consumers report concern of the impact of inflation on the cost of living. City employee salaries are buffered from these projections, with the data for November suggesting that the average salary change was 18%. Despite this, a stagnation of wage growth for such a large portion of the population would invariably decrease consumer spending, causing economic contraction.
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