What is the impact of Brexit really going to be on the City’s job numbers?

Joe Charnaud 15.11.2018

Most of the major players in the City are staying tight lipped around the finer details of their Brexit/post-Brexit plans – the term ‘uncertainty’ has been banded around like there’s no tomorrow in 2018, and it’s ‘uncertainty’ that has dictated hiring trends within City (and Wharf) based banks this year.

Brexit uncertainty holding professionals back from moving role

The top end of the London job market has stagnated in 2018 - Banks have been delaying decisions on senior hires, and subsequently there is reluctance for professionals to move externally. It is also somewhat ironic that all this has resulted in some London recruitment firms being busy with senior permanent hires in 2018 outside of the UK. The reason for this is that, deal or no deal, the majority of businesses with an existing presence in Europe have already made the decision to move more of their operations into a country that is guaranteed to still be in the single market come April 2019.

This has meant that for those wishing to move to Ireland or Frankfurt, the job market has actually been very buoyant! The catch with that statement is the Financial Hub of Europe has been London for such a long time, and the majority of those who work in Banks (certainly at the senior end of the spectrum) have husbands or wives and children that are settled. Consequently, there is a growing sense of optimism for London post Brexit, however the question that still remains is: How many will stay and how many will go?

The best case scenario

The UK agrees a deal, stays in the single market and it’s business as usual...likely story? The reality of the situation is that even if some sort of deal is reached, most of the larger organisations have had their hand forced already and have already built out entities in the EU. The good news is it’s likely to not be quite as an extensive reorganisation as many of the newspaper headlines have stated because of what is mentioned above: Re-passporting reasons.

The main difficulties of moving a London based bank to another country are that it is not only very expensive (think of all the new infrastructure that would need to be built, migration of systems etc...), but also that even if it could be done cheaply, the knowledge/subject matter expertise would require quite a large proportion of those currently residing in the UK to relocate.

Therefore the outlook could, and hopefully should, be much more positive than many believe. The cheaper option appears to be keeping many middle and back office roles in London and moving as few as possible into a new entity in an EU country.

The worst case scenario

There is no deal, the UK leaves the single market, there is mass panic across the City and everyone is immediately relocated away from London!

In all seriousness, hopefully (and I may be wrong), there would not actually be too much of a difference between best case and worst case. As I have alluded to above, many Banks have already gone too far in their contingency plans for Brexit that, regardless of either a good or bad deal, they are moving some functions abroad.

Even if a Bank’s long term plan is to move to Europe, it is not something that is going to happen overnight, it will take time, and will likely be a gradual movement that allows employees to adapt by either relocating or finding work elsewhere.

Conclusions...

It’s very difficult to know for sure what is going to happen to the London job market - that’s the reality of the situation. The noise coming out of the City to date suggests it is unlikely that we will see wholesale changes overnight. Even if the worst does happen and the majority of jobs are offshored to Europe, this will be a gradual process and anyway, the indicators we have now suggest that the preference for most is to keep as much as possible based in London.

Joe Charnaud's picture
Senior Consultant
jcharnaud@morganmckinley.co.uk