The Booming Brexit Jobs Market
A poll from Reuters of 134 major financial firms found that a total of 5,800 could still be shifted abroad in the event of Brexit being delivered in-line with what the majority of the British voters voted for, but that the much feared “Brexodus” didn’t materialise
Those who have read about the British economy after the 2016 EU referendum were, and probably still are, led to believe that jobs would all leave Britain because of Brexit. They were wrong then and are wrong now.
Since 2013, unemployment in Britain has continued to fall. Even after the referendum, unemployment continued to fall and was the lowest of any major EU country at just 5% of the workforce. In the 3 months to June 2016 55,000 jobs were created, when businesses knew Brexit was a 50:50 possibility. The foundations of the British economy were much stronger than other EU countries. In August 2016 reports came out that there was a big rise in the number of full-time jobs as well as part-time, disproving the criticism that the jobs created over the preceding few years were those with zero-hours contracts or part time. Over the first five months of 2016, there were more than a third of a million full-time jobs. One of the biggest benefits was that those jobs tended to be created in the poorer areas of the North of England. A bullish survey from Markit on consumer confidence added to the optimism. It was a good few days with a raft of UK and overseas companies reporting strong results and shrugging off the uncertainty.
Another example was Northern Trust announcing that it wouldn’t cut jobs in London after revealing plans to set up its new EU base in Luxembourg. The Chicago-headquartered provider of banking and asset management services employs 1,500 people in the capital as of 2017. Many insurers, asset managers and banks already revealed the location of new EU headquarters in preparation for Britain’s exit from the EU. Having a base within the union will provide them with pass-porting rights across all EU countries. A spokesperson for Northern Trust told City AM the firm has plans for a significant presence in Luxembourg and there would be no redundancies as a result of the move. Northern Trust narrowed its selection down to the Grand Duchy and Ireland. In February 2017 it announced plans to buy UBS Asset Management’s fund administration arm, which has a significant presence in Luxembourg. Luxembourg has been a popular selection within the insurance sector, with the likes of AIG, RSA and Hiscox selecting for their European headquarters. Northern Trust European and Middle-East president Teresa Parker said Luxembourg’s selection highlighted their commitment to growing their business in continental Europe. Luxembourg for Finance, a government-sponsored lobby group, claimed it was delighted with Northern Trust’s decision.
On the 18th December 2017 news came out about a report by law firm Baker McKenzie. It found that the value of foreign firms floated on the London Stock Exchange surged to a five-year high of £6 billion in 2017. On top of that, analysis by the pro-EU newspaper, Financial Times, shows that banks scaled back their threats to shift jobs out of London post-Brexit. Before the referendum campaign, City lobbyists claimed that 75,000 staff could be relocated or sacked if Leave won. That was Project Fear blown back in their faces.
On the 6th May 2018, reports came out that unemployment could be set to fall to levels not seen since the 1950s as Britain’s jobs market continued to boom. In a major vote of confidence for the economy, one of Britain’s most respected think-tanks Oxford Economics said that the jobless rate could fall to levels not far off the 2-3% average of the 1950s and 1960s. While the British economy got off to a slow start to 2018, unemployment was at its lowest level in 43 years and was much lower than in the Eurozone, where the number of people out of work was painfully high. Unemployment fell to 4.2% in the three months to February 2018, the lowest rate since 1975 – less than half the 8.5% jobless rate on the continent. These figures showed the number of people in work rose to a record high of 32.26 million – up by 505,000 since the Brexit vote. The chief UK economist at Oxford Economics Martin Beck said that there was a chance Britain could return to full employment, providing a major boost to Britain’s jobseekers. He argued the British jobs market shares paralleled with that of the 1950s and 1960s, when unemployment averaged 2-3%. In 1955, the proportion of the population out of work sank to just 1.55% as the then Government, led by Prime Minister Anthony Eden, made boosting employment one of its top priorities. Back then, wages went through a prolonged period of rising more slowly than output, meaning it was cheaper and more attractive for businesses to hire workers.
On the 14th September 2018, reports came out that Chanel, the legendary fashion house that generated global sales of over £7 billion in 2017, chose London as the place to consolidate its global operations for the first time, despite being founded in Paris over 100 years ago. Several senior executives were set to move and the company’s main New York offices have relocated to London, bringing dozens of jobs with them. As of the end of September 2018, City of London firms held back from relocating jobs to the EU with just 630 UK finance roles moving abroad since the Brexit vote. A poll from Reuters of 134 major financial firms found that a total of 5,800 could still be shifted abroad in the event of Brexit being delivered in-line with what the majority of the British voters voted for, but that the much feared “Brexodus” didn’t materialise. Firms in London, a global hub for financial services, took 3.7 million square feet of space between July and September 2018. More office space was filled in London.