Next week’s referendum on Britain’s membership of the EU has potentially seismic implications for those who make their living in the City of London.
A vote to remain will reaffirm the City’s importance as one of the principal financial centres of influence. A vote to leave will, according to many experts, cause upheaval with a talent drain out away from the UK and on to mainland Europe.
A report in the Sunday Times at the weekend, headlined “Banks prepare for City exodus in wake of vote” claimed that some of the biggest overseas banks have put in place plans to withdraw thousands of workers if the Leave campaign triumphs.
French banks are among those said to be drafting strategies to relocate London-based staff to Paris. The deputy mayor of Paris even went as far as saying the French capital will be “rolling out the red carpet” to financiers based in the City.
A report by PricewaterhouseCoopers believes as many as 100,000 financial services jobs could be lost if Britain takes the decision to quit the EU. The report claimed that many of the jobs would return over the subsequent 15 years as new trading agreements were put in place, but that the overall loss in value to the economy would be an estimated £5billion.
We know from our work within the financial services sector how dependent financial services employers are on recruiting talent from the European mainland to come to the City of London. A recent census backed this up – almost 11% of the City’s 360,000 workers come from elsewhere in the EU.
A vote to leave will inevitably see the financial centre of gravity shifting to the mainland with banks and other institutions moving to beef up their operations in major European cities such as Paris and Berlin.
The drain of talent away from the UK will include British workers who see greater career opportunities in mainland Europe. It is also likely, in our ever more global economy, that financial services talent looks further afield too to the likes of Hong Kong and Singapore.
For those who choose to remain in the City of London, there will also be opportunities. While it is likely that certain functions will be lost to the mainland, the turbulence caused by a vote for Brexit will almost certainly create roles that need to be filled in the UK.
From talking to our contacts, it is clear that the City is holding its breath to see which side is victorious next Thursday.
One global financial services client spoke of their concerns about the likely reduction in mobility in the event of a vote to leave. EU nationals wanting to work in the UK and vice versa would in future need to apply for visas and sponsorship in order to take up positions. Another consideration is those British workers who are married to EU citizens and working in European hubs who may suddenly find themselves having to uproot their families and return to the UK. Relocation costs of many businesses in the sector are likely to soar in the event of Brexit.
The current state of uncertainty – the latest polls suggest the campaigns are running neck-and-neck – has caused the sector to largely hang fire on any major recruitment decisions until the result is known. There are still pockets of activity, particularly in digital, risk and compliance where we are working with clients on a range of talent insight, talent mapping and talent pipelining projects.
Of course, Brexit is not the only issue affecting the City of London and world markets in general at the moment. There are continuing macroeconomic concerns surrounding declining commodity prices as well as the slowdown in China. The indecision hanging over Britain’s future within the EU simply exacerbates an already difficult market for those whose livelihoods are dependent on the financial services sector.
While every sector will be affected by the upcoming referendum – whatever the decision – the implications within financial services are perhaps the greatest.
No industry wants to operate in a state of uncertainty. That is why there is such palpable relief that the June 23rd vote is now just a week away. Financial services organisations will then have to assess the shape of the landscape and ensure they are doing everything they can to attract and retain the best talent to emerge stronger on the other side.