As we so enjoy doing around here we’re going to put a number into some sort of context. It’s said that Brexit will cause as many as 5,000 jobs to move over to the Continent. This is perhaps 1% or so of the jobs in The City. Or if we think of the wider financial services market, perhaps 0.3%. Whether or not you think this is a problem will depend upon your sense of proportion. Actually, whether you’ve got one or not.
The news itself:
John Glen told Parliament he was backing a prediction by the Bank of England that 5,000 to 10,000 jobs would vanish by Day One – 29 March 2019
In a little more detail:
The UK government expects thousands of financial services jobs to have moved to the European Union by the time of the UK’s exit from the bloc.
City minister John Glen said that the situation was “stable” as far as job movements were concerned.
However, he agreed with Bank of England estimates of 5,000 City jobs moving to the continent by March.
Sounds appalling of course, a whole 5,000? And then we need to consider.
The City itself has perhaps 300,000 people working in it. Add in the Mayfair hedge funds, Canary Wharf and so on and we get to some 500,000 people working in the wholesale financial markets (note, obviously enough, that not all who work in The City are in those banks). Losing 5,000 jobs is 1%. Less than the sort of annual variation we’ll get over the financial and business cycles that is.
Expand out to the whole financial services sector and we’ve more like 1.5 million people working. Making the job loss due to Brexit more like 0.3%.
And, well, let’s face it. These numbers are rounding errors, aren’t they? They’re not important inputs into the Brexit or no-Brexit decision at all. We can – and should – safely ignore that impact upon jobs in The City therefore.
Sure, there’re many other things we can worry about and both ways too. Offsetting sovereignty against car manufacturing, say. But the City? Ignore it.
And those 5% (if they exist at all) are not going to be the ones making 7-figure salaries in dealing rooms, but the clerks in back offices.
No, because if those clerks were earning their pay, then they will continue to do, and paying to relocate them doesn’t make sense. It is the 7-figure dealers who, with a customs inspection between them and their Brie and Beaujolais, may opt for remote control.
Nobody *wants* to relocate anyone. The argument is that EU ‘passporting’ requires a ‘presence’ within the EU in order to conduct financial business there (I don’t entirely buy this argument, but let’s accept it for now). So, worst case (if we don’t already have a presence somewhere within the EU – many will, of course) we need to establish a small outpost with a few admin staff in Dublin (probably) or Riga (cheaper) – job done! But we won’t be moving our dealing room, thanks, as all our key staff would walk before accepting a transfer to Paris or Frankfurt.
Agreed; it is so simple to game this requirement, as to make it absurd to claim macroeconomic consequences of it.
But I thought that globalism affected not the number but the type of jobs in an economy?
The UK after Brexit may need less banking; so, yes, some bank workers will not disappear but will be working at something other than banking. However, this will affect employment numbers in “the City” (and could cause the “City limits” to contract).
But I thought that globalism affected not the number but the type of jobs in an economy?
And those 5% (if they exist at all) are not going to be the ones making 7-figure salaries in dealing rooms, but the clerks in back offices.