November 10, 2017
There are ongoing dual narratives in UK economy caused by the 2016 Brexit vote, the latest Morgan McKinley October Employment Monitor suggests. On the one hand, a new report by Colliers International dubbed London Europe’s top economic City. On the other hand, institutions are stubbornly stuck in limbo, and the fear of major jobs losses looms thick in the sky, keeping hiring low. “The economic tug of war that Brexit kicked off means we still have no idea quite where we’ll land,” said Hakan Enver, Operations Director, Morgan McKinley Financial Services. October was the lowest jobs month of 2017, a possible indication that the closing months of the year will be especially quiet. Job seekers increased by 6 percent month-on-month, but were down just under 40 percent year-on-year. The trajectories are in line with the overall dual trends of 2017. Jobs available were down 14 percent month-on-month and 20 percent year-on-year. Given the underlying health of the economy, Brexit looks to be the main culprit for the job market attrition.
The dual narrative is also apparent in the investments that financial services companies are making in London. Though Goldman Sachs opened its famed new City offices with much fanfare, Goldman CEO Lloyd Blankfein now says he is unsure if they will be able to fully staff the space because of Brexit. “Brexit has businesses in a stranglehold. Try as they might to go about things as normal, we do not live in normal times,” said Enver.
In October it was made public that the government has compiled 58 detailed economic impact studies on the potential consequences of various EU exit scenarios. Financial services was among one of the sectors measured. “It’s reassuring that the government is taking the impact on the City seriously enough to include it in its short and long-term planning,” said Enver.
As the reports examined a multitude of hypothetical scenarios, their accuracy and utility are not widely known, though many in government and business are clamouring for details. “Hopefully if there is anything in the reports that could help business better prepare for the eventual departure, it will be made available to them,” said Enver.
Further complicating matters is the shifting costs cited by EU officials for the price of divorce proceedings. “The EU keeps moving the goalposts, which is an unnecessary complication for an already fraught situation,” said Enver. “With 15 months left before the purported departure, time is running out fast.”
Indeed the Confederation of British Industry (CBI) has announced that it expects companies based in Britain to trigger their Brexit contingency plans in March of 2018, if no roadmap is made available to them. “We’re going to blink and Christmas will be over. Then the government will have only three months until companies pull the lever on London,” concluded Enver.