How will leaving the EU affect the financial job market?
With only a few weeks to go until the EU referendum, there is still a great deal of uncertainty on how Brexit could affect our job market. Here, Charlotte Walker, Branch Manager of Staffordshire, Cheshire and Greater Manchester recruitment specialist Brampton Recruitment, explains how the financial job market could be affected by examining a recent report by PricewaterhouseCooper (PwC).
PwC has put together a detailed report commissioned by TheCityUK. The report found that if Britain opts to leave the European Union it could result in up to 100,000 financial services jobs being scrapped by 2020. This would constitute a major impact to the financial services sector, which is a cornerstone of our economy. The report also found that Brexit could reduce the financial sector’s contribution to the UK economy by up to £12 billion by 2020, when compared with a model of the UK remaining in the EU.
The report did find that employment would gradually recover, but in the longer term, we could still be down between 10,000 and 30,000 jobs by 2030, with lower migration accounting for some of this decrease.
However, the report states that the financial sector would continue to grow, although the value of the sector by 2030 would be significantly lower than if the UK remained in the EU. Two key players in the financial industry, Goldman Sachs and J.P. Morgan, have issued warnings on the risks posed to the sector caused by leaving the EU.
Currently there are firms from all over the world using their London bases so they can operate across Europe – a phenomenon known as ‘passporting’. This brings both jobs and investment to London. It is unclear whether these firms will want to maintain a European base that is outside of the EU and this may result in banks relocating their European corporate centres to mainland Europe. A decision to leave the EU would also affect the financial services by making the movement of financial professionals within Europe more difficult.
Leaving the EU could benefit small companies that do not trade with EU countries. This is because they are currently under EU legislation that better suits larger businesses. Currently, the UK lacks the power to veto any detrimental EU ruling and can be outvoted on important issues. Brexit may therefore positively affect the financial services by cutting the red tape put in place by EU legislation and in turn, give more control to the UK Government.
When trading with EU countries, Britain would still have to comply with EU regulation and negotiation of new treaties would also be necessary. Famously, Norway has prospered from trade agreements with the EU and there is an argument the UK would do the same.
Since the announcement of the referendum, recruitment into the industry has been affected by uncertainty. This apprehension has also delayed investment decisions and reduced activity in the build-up to the referendum. A decision to leave the EU will extend this uncertainty further, affecting recruitment in the long term.
Brampton Recruitment will be releasing the results of our very own Brexit survey, conducted with business professionals in the Staffordshire, Cheshire and Greater Manchester area. Keep an eye out for the results that will be published on our blog in the next few weeks.
If you are worried about securing your dream financial position in the unpredictable time of the EU referendum, don’t panic! Here at Brampton Recruitment we have the knowledge and experience to help you navigate the financial job market, whatever the UK decides.