10,000 finance jobs lost since Brexit?
September 25, 2017
What was claimed
10,000 jobs have already left the financial services sector following the EU referendum vote.
We have seen no evidence of this. A survey predicts that 10,000 jobs could be displaced from the UK if we leave the single market. We don’t know what type of Brexit deal will be reached and the investigation has additional limitations.
“Regardless of the reality [Brexit] Divorce Law, 10,000 jobs have already left the financial services industry.
Vince Cable, September 21, 2017
This is not what the source of the figure says. The 10,000 jobs figure is based on forecasts of future jobs coming out of the UK and a particular Brexit model that is not yet certain. There is no evidence that 10,000 jobs have already been cut from the financial services sector since the Brexit vote.
So where does the number come from?
The Liberal Democrats told us that Mr. Cable was referring to an article in the Standard Evening. The Standard, in turn, said Miles Celic, chief executive of TheCityUK, the representative body for the financial and professional services industry, “confirmed estimates that 10,000 jobs have already been lost” since Brexit.
TheCityUK told us that Mr Celic discussed this figure on the Today’s program Last week. During the show, presenter Dominic O’Connell said that the latest estimate of Reuters was that 10,000 people had left the financial services industry since the referendum.
This is incorrect – the Reuters figure is a prediction of how many jobs the sector could be lost or moved overseas in the future if the UK leaves the single market.
Mr Celic was then asked if the 10,000 figure sounded correct: he replied that he did not feel “in the wrong stadium” because TheCityUK had ordered independent analysis in 2016, which suggested that at least 35,000 jobs could be lost due to Brexit.
Source of 10,000 figure does not claim how many jobs have been lost since Brexit
The recent Reuters investigation leading UK-based financial services companies suggest around 10,000 finance jobs could be moved from the UK or created overseas if the UK loses access to the single market after Brexit .
These are not jobs that have already moved. In fact, there is no specific time frame for the loss of these jobs.
Separate ONS figures also show that the number of jobs in financial services activities in June 2017 was at a similar level to that in June 2016, when the Brexit vote was taken. Even though these numbers do not tell us what is causing the changes in the number of jobs, there is still little evidence of the large job cuts suggested by the 10,000 figure.
Recent business survey cannot give us a definitive picture of future job losses
The survey itself also has limitations – it cannot give us a definitive prediction of what will happen to finance jobs during and after Brexit.
The survey, carried out in recent months, reached 123 of “Britain’s largest and most international financial firms”. Only 39 companies employing around 350,000 people actually provided responses to their staffing plans. No information was provided by some of the largest employers in the industry, including Bank of America and Credit Suisse.
This could suggest that the figure could be much higher if all companies were polled, but the picture could also be affected by the type of Brexit that ultimately occurs.
It depends on the type of Brexit deal that is reached
The key question here is whether the UK retains access to the single market, and therefore the banks based there are able to exercise the ‘passport’. This means that a company authorized in an EEA Member State can “carry on activities authorized in any other EEA Member State”.
The investigation found that many UK and US banks are currently using London as a passport base, and therefore the UK’s withdrawal from the single market would require moving jobs out of the UK in order to establish a ‘EU Hub” somewhere else.
Uncertainty over the shape of Brexit means that many survey respondents said they are choosing to exploit a “two-step emergency plan”. This usually means moving “a small number to ensure the required licenses and infrastructure are in place”, before making a final decision on how many jobs to move once the Brexit situation becomes clearer.
Uncertainty could also slow down banks’ actions on employment
Two reports from the firm Oliver Wyman predict a much higher level of potential job losses in the banking sector. One from 2016 predicted up to 35,000 finance jobs could be lost in a ‘hard Brexit’ scenario, with the figure rising up to 75,000 once “additional activities” related to the financial sector, such as insurance, have been taken into account.
Another report from the same company in 2017 in the same way predicted up to 40,000 are funding job losses, without specifying how many more could be lost due to “extra activities”.
The 2017 report also finds that uncertainty over the form of Brexit limits the current action of banks. He found that many banks are currently focusing on low-cost relocation of license applications to other EU jurisdictions, rather than making firm decisions on transferring jobs.
In any case, it is therefore too early to judge the banks’ response to Brexit in terms of job shifts abroad.
Update October 31, 2017
We’ve added more information on previous estimates of Oliver Wyman’s potential job losses.