Global real estate consultant Knight Frank is reporting since the UK’s vote to leave the EU in June 2016, there has been widespread concern that jobs might leave the UK, or firms will delay recruitment. The focus has been greatest on the financial sector, as many international banks and insurers have been able to operate across the single market via their London office’s regulatory licence. However, concerns of a financial jobs ‘Brexodus’ from the UK may be overlooking long-term trends within the UK economy. Tech is increasingly overshadowing finance.
Regular readers of this note will know that the Technology, Media and Telecoms (TMT) sector overtook finance as the largest source of demand in the Central London office market back in 2011. As a result, prime rents in Clerkenwell and Shoreditch in London’s tech belt reached parity with those of the City Core (the capital’s largest financial district) this year. However, there is now growing evidence that the tech revolution is becoming a national phenomenon, and one that is undaunted by the prospect of Brexit. Figures from the Office for National Statistics (ONS) on UK employment point to a long-term shift towards the information and communication sector, which is broadly similar to what the property world refers to as TMT. This is more than compensating for lost jobs in finance and insurance – see figure one. In Q2 2017, 12.4% more people worked in information and communication in the UK than finance and insurance. Back in Q2 2007, finance and insurance employed more people by over 21.0%.
Upwards Trajectory This difference in fortunes between the two sectors is remarkable, with information and communication employing over 28.0% more staff than a decade ago. Headcount for finance and insurance is down nearly 6.0% over the same period, having seen a rollercoaster ride for job numbers contrasting with the upwards trajectory for information and communication. However, what is most striking is the data covering the period since last year’s referendum. The number of people working in information and communication has jumped 11.4% in the year to June 2017, recording growth every quarter. Finance and insurance has shed 73,000 jobs over the same period, although information and communication more than counterbalanced this with 138,000 jobs created. The 73,000 finance and insurance job losses occurred in the six months immediately after the referendum, so too soon to be relocations to Europe resulting from the referendum. These were probably redundancies already in the pipeline irrespective of the referendum outcome. This reminds us that finance is an industry under-going huge change in the face of increased regulation and automation. That the finance and insurance figures have flat-lined this year, tallies with anecdotal evidence that the banks are not hurrying jobs out of the UK.
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