News that the Bank of England anticipates up to 75,000 financial services jobs being lost as a result of Brexit is an alarming addition to those “mixed signals” about the state of London’s economy reported in the most recent GLA economics bulletin. How alarmed should we be?
On the face of it, quite a lot. The BBC, which discovered that the figure is thought by the Bank to represent a “reasonable scenario” over the next three to five years, points out that it is more pessimistic than some earlier predictions, less so than that of the London Stock Exchange but in line with a 2016 study.
No one seems to believe jobs won’t move to Paris, Frankfurt or elsewhere. And if 75,000 really do disappear by around 2022 their absence will be felt. The City UK, a membership organisation that lobbies for the financial sector, has estimated that there are just over 750,000 people employed in London’s financial sector. You do the maths.
And, of course, if financial services employment shrinks by 10%, other businesses – catering, clothing, hotels, tech boffins and so on – that depend on the sector being the size is it now will be hit too. Not a happy thought.
However, the usual caveat applies: London’s economy is famously resilient. The GLA’s economists reported that it hasn’t been all gloom on the jobs front as a whole and that consumer confidence in London remains marginally positive compared with a clearly downbeat mood elsewhere in the UK.
Richard Brown, director at the Centre for London think tank, points out too that unemployment is low and gradual job growth continuing, while there’s also been “an uptick in international visitors and spending” over the last quarter.
But Brown doesn’t demur from the potential seriousness of the Bank of England’s 75,000 job loss projection. He points to the cooling of London’s property market and migration indicators as other pointers to “continuing uncertainty”.
Wherever you stand on Brexit, it’s not exactly great that no one knows what’s going to happen next.