Brexit Fallout Could Sap London
London isn’t the only UK city poised to see widespread job cuts in the financial sector as the Brexit looms.
Over the past year, few industries have been harder hit than the banking sector, especially in the UK as a combination of factors ranging from rising labor costs to a gradual migration towards a digitized banking system have led to job losses. Coupled with the specter of the Brexit, UK lenders are reeling, facing lower revenues and profits.
Previously, the epicenter of this phenomenon has been London, with virtually every big lender in the city opting for some level of job cuts – this trend has been led by mainstays such as Deutsche Bank, Standard Chartered, and Barclays, among many others. However, London isn’t the only city that’s facing a large number of outgoing jobs.
Many other cities in the UK have also faced job losses, the vast majority up to now being back office or IT roles, though trading desks have also felt the pinch, specifically in the foreign exchange (FX) and fixed income space. According to a recent Bloomberg report, the majority of finance jobs are actually from localities outside of London.
Not a London-only Issue
One factor that will ultimately dictate the trajectory of future cuts is the fallout of Brexit. Lenders in the UK recently found their slim hopes of retaining passporting rights in the country summarily crushed, meaning many jobs will likely be headed offshore. Currently the two most likely destinations for the majority of UK jobs are Dublin and Frankfurt. Both cities could be the recipients of thousands of UK jobs over the next few years, namely in the finance sector, though Amsterdam has also emerged as a potential dark horse candidate as cities vying for Europe’s banking capital post-Brexit. A schism with Europe in any case would result in a large number of jobs leaking not just out of London but from all corners of the UK.
Such a fallout would have large repercussions on the economy, a fact only exacerbated by the uncertain nature of the entire Brexit timeline. Companies nationwide will be looking for clues in the meantime as Theresa May moves closer to a formal exit from the EU.