We often unthinkingly assume that the City, London’s Square Mile, is the epicentre of the financial services industry.
This is partly factual: the City’s equities and bonds market is bigger than the rest of the European Union combined, and its forex market is larger than the US and Japan combined. About 300,000 people are employed in the City, and our banking industry – which is five times the size of the UK economy – tends to have all its HQs there.
I don’t think anyone is fearing an exodus
But a new report partly debunks that given about London’s pivotal role in the industry, showing that nearly two-thirds of financial services jobs are in fact based outside the English capital.
The report by Square Mile lobby group TheCityUK shows that 1.5 million of 2.2 million industry jobs are located outside London, with hubs like Edinburgh, Glasgow, Birmingham, Bristol and Manchester each employing anywhere between 30,000 and 50,000 financial and related professional services jobs each. This sounds, and to a large extent is, positive news for the areas themselves and also for the UK economy as a whole as it creates a financial eco-system that is a centripetal force for foreign businesses thinking of investing in the country.
But it may not be unmitigated good news because if banks, brokerages and fund managers transfer hundreds or even the low thousands of their staff to other jurisdictions following the UK’s Brexit vote, it could mean that the regions feel the pain and not just the City.
For instance, American financial services giant JP Morgan has said that it could shift about 4,000 of its 16,000 UK staff overseas. The group employs about 5,500 staff outside London, including 1,200 in Glasgow, 300 in Edinburgh and 4,000 at its global technology and operations centre in Bournemouth. Glasgow also hosts 1,200 staff of another American giant, Morgan Stanley, while Belfast has 2,000 Citibank workers.
I don’t think anyone is fearing an exodus. Any moves of operations and staff overseas is likely to be based on firm-specific business models rather than any general climate of flight.
But given that finance and related jobs in the regions can account for up to 5 per cent of the total local workforce, any impact could still be noticeable.