Both EY and Robert Half Financial Services have published different reports on the number of jobs coming in and out of the UK, ahead of Britain's departure from the European Union.

Around 10,500 UK financial jobs, including many front office roles, could be relocated to other parts of Europe in time for the first day of Britain’s exit from the European Union, according to EY’s financial services Brexit tracker.

However, according to a Robert Half Financial Services report, the outlook is not so bleak. More than half (59 per cent) of the UK’s financial services executives have increased their level of onshoring - transferring offshored business operations back to the UK – over the past two years, compared to just 4 per cent who have decreased their onshoring activities, it shows. 

There has been a lot of debate and scrutiny over whether Brexit will affect the financial services industry in the UK, with some firms having said they are pulling out of the country, while others have suggested it will have no impact. These reports both show the sides of the contentious debate, as negotiations continue between the UK and the EU - including a breakthrough deal between the two last week - enter into the second phase of talks, which includes discussion on trade agreements.

EY
EY's tracker, which examined 222 firms based in London, found that 68 (31 per cent) of the largest financial services companies in the UK have said they are considering or have confirmed they will move some of their operations and/or staff out of the UK as a result of Brexit.

Of these, 26 are universal banks, investment banks or brokerages; 17 are asset managers; 13 are insurance companies; and 12 are fintechs, retail banks and private equity houses.

Nearly a fifth (19 per cent, or 42 out of 222 companies) have now confirmed at least one relocation destination in Europe. 

Comparing year-on-year, in 2016, only 4 per cent (8 out of 222 companies) had confirmed a location in Europe, whereas at the same point in 2017, 15 per cent (34 out of 222 companies) have communicated their plans publicly.

Dublin and Frankfurt remain the frontrunners in popularity, attracting 14 and 12 companies, respectively, since the day of the referendum result, the majority of which are asset managers, universal banks, investment banks and brokerages.

Luxembourg is the next most popular destination, attracting eight companies, followed by Paris, attracting six firms.

“Contingency plans have developed significantly over the last year, putting firms in a stronger position to estimate how many UK jobs they need to move,” said Omar Ali, EY’s UK financial services leader. “Firms are working hard to find viable solutions that will allow them to continue to serve their customers and satisfy regulators with the minimum disruption. As a result, many of the jobs that are moving are client facing, front office roles to ensure that companies can continue to serve their clients under EU law from day one. The extent of broader strategic restructurings and relocation plans will of course ultimately depend on the specifics of any long-term UK deal with the EU, but a drop in the volume of jobs moving will be welcome news for the City. Whilst the relocation of this number of roles will have a significant impact on the smaller financial services centres on the continent, it is unlikely in the short term to threaten London’s role as Europe’s main financial hub."

Ali added: “The increase in the number of firms publicly setting out their contingency plans highlights the level of planning the sector has done. The announcement on Friday from the negotiators on both sides sent a wave of relief across the City, as it signalled an intention to agree a transitional period as early as possible next year and the starting point for negotiations on future trade deals. Both of which are fundamental to avoid adding any additional risks to the system and for the future strength of the UK financial services industry.”

Robert Half
The specialised recruiter Robert Half, which provides solutions for financial services firms, surveyed 100 chief financial officers and finance directors within the UK's financial services sector, to discuss job trends, talent management and trends in the workplace.

Despite the UK’s departure from the EU, the reports said London remains the world’s number one financial centre, and increased levels of onshoring could lead to more jobs being created in the financial services sector.

When asked why firms have increased their level of onshoring, 64 per cent of financial services executives refer to service quality complaints and 54 per cent refer to the increase in costs – indicating a cost and quality factor in determining operations being brought back to the UK. The skills shortage (53 per cent) and a lack of efficiency in the offshored regions (37 per cent) are further cited as key reasons for transferring offshored business operations back to the UK. 

In an indication that offshoring is not just about costs, but also a matter of dealing with the working environment in the UK, nearly half (44 per cent) of financial services executives would consider shutting down offshore activities and returning their operations to the UK if the work was carried out more efficiently. In addition, 34 per cent would consider the same if they could find the right skills and expertise available locally.

Onshoring can result in benefits for UK companies. Almost half (44 per cent) of the UK’s financial services leaders who have returned business activities to the UK say it has resulted in increased service quality, followed by increased customer responsiveness (42 per cent), increased focus on the core business (41 per cent) and an increased focus on innovation (38 per cent).

“In the face of change, financial services companies in London are increasingly under pressure to remain competitive by maximising performance and decreasing costs,” said Matt Weston, director at Robert Half UK. “In order to achieve this and offer a premium service, many firms are bringing key business operations back to the UK and creating ‘centres of excellence’ by creating jobs and career development opportunities for local talent.”

Weston added: “To fully leverage the advantages of onshoring key business activities back to the UK, organisations need a functioning workforce that is efficient and equipped with the right skills. UK firms are experiencing greater innovation and increased efficiencies, and finally have access to the necessary expertise that was previously hindering businesses that had moved their operations offshore. To avoid future skills shortages and ensure their workforce operates at an optimal level, financial services companies need to invest in adequate training programmes to develop these business-critical competencies. Failing this, employers are looking externally to recruit qualified professionals on both a temporary or permanent basis to meet strategic and operational objectives.”