How has Brexit actually impacted employment in London?19 Oct 2020
Today we wanted to review the way Brexit has impacted employment in London. New data from a well-renowned employment monitor has shown that economic uncertainty is “biting”, despite the rise of vacancies in Q1 2019.
The monitor focuses specifically on employment in the financial sector between January and March 2019.
Having seen 2018 close with a very poor jobs market, the prospect of business growth has presented a huge challenge for many business, and as a result the employment situation started 2019 very much on the back-foot.
In comparison to this time in 2017, there are currently less than half the jobs and less than half the job seekers.
Although the first quarter of 2019 saw an increase in both of the above, a deeper dive into the data shows that the City jobs market has decreased, with jobs and job seekers dropping year-on-year to half the figures for 2017.
The highlights from Morgan McKinley’s employment monitor for Q1 2019 are:
9% increase in jobs available, quarter-on-quarter.
9% decrease in jobs available, year-on-year.
2% increase in job seekers, quarter-on-quarter.
15% decrease in professionals seeking jobs, year-on-year.
Delayed Brexit leaves questions unanswered
Even with all the uncertainty of the last few years, there was always an assumption that, come the March 29th of this year there would at least be some answers and subsequent planning.
Yet, the wait goes on and direction remains absent.
The employment monitor has cited the ongoing years of Brexit-related confusion as the predominant reason behind the shrunken employment market. It appears businesses and job seekers alike feel they are less able to take risks in the unstable climate.
This consensus matches up closely with other reports that have been conducted around this topic, such as IHS Markit’s PMI survey and BDO’s Business Trends Report.
Government stalemate crushing confidence
The inability of the government to reach a consensus on a Brexit deal has crushed confidence among City employers.
Now that the original deadline has been and gone, and the country seeming no closer to formulating a deal that the majority of parliament will get behind, the EU27 has had no choice but to extend the deadline once again - this time until the October 31st, with an review scheduled for June.
The reality is, the government had over two years to do its homework and complete the assignment. Right before the deadline, they shouldered responsibility and searched desperately for an excuse to extend the deadline for their work - ultimately deciding to try to work with the opposition to protect the people, instead of their own political power.
As a result, it is most likely the smaller firms that are now being hit hardest, as they have fewer resources with which to plan and adapt.
As the UK waits for the outcome of the second Brexit extension, jobs continue to flow out of London, with Dublin by far the biggest beneficiary, followed by Luxembourg, Paris, Frankfurt, and Amsterdam.
Although the country and its businesses remain uncertain of what the future will involve for the economy, employers in the financial sector have had to act ahead of time.
For the bigger banks, the 29 March was the deadline - there were no extensions. They have rolled out their Brexit plans and are deftly deploying staff and other resources to key EU locations.
In the face of this ongoing uncertainty, the UK’s technology sector has proven that it is able to continue to adapt and present the country with a source of lucrative revenue, having earned £2.5bn in new investments last year (according to London & Partners and PitchBook).
Although the technology sector still remains one of the best in Europe, Morgan McKinley has outlined that it has just seen the lowest rate of growth in three years - thus proving that the economic juggernaut is now also beginning to feel the strain.
“It will take us a decade, at a minimum, to clean up this mess, which is why we can’t afford another six months of uncertainty. And we can’t afford a hard Brexit.”
In recent history, the combination of financial services and technology jobs were the crown jewels of the UK economy, attracting the best and the brightest to the UK - yet financial services are struggling to recruit top technology talent in the wake of Brexit.
A statement attached to the employment monitor suggests, “It will take a decade, at a minimum, to clean up this mess, which is why we can’t afford another six months of uncertainty. And we can’t afford a hard Brexit.”
Unfortunately, the government has played it in such a way that the UK could still potentially end up with both.
As an accountant with significant experience working with small and owner-manager businesses, our team are completely aware of the challenges Brexit is throwing at SMEs all over the UK, and have worked with numerous clients to deliver bespoke accounting solutions and business strategies to help them navigate the choppy seas ahead.Are you concerned about how Brexit may impact your business? Get in touch with our team, or try our instant accounting quote and one of our experts will be in contact with you shortly.