London’s booming tech sector dominates the rest of the UK, but there’s a fly in the ointment - the capital’s tech workers are Britain’s most restlessThere have been plenty of stories from doom-mongers circulating in the media recently about banks preparing to move out of the UK to the continent following the EU referendum result. It can’t be denied that Brexit presents some challenges to banks operating in London in the years ahead; however, there are some good reasons why the kneejerk reaction of relocating outside the UK, resulting in the loss of tens of thousands of jobs, may be paused while banks think again.
Safety in numbers
As the details of the Brexit proposals are still being planned, banks have a greater chance of making themselves heard if they present their arguments as an industry rather than as separate entities.
Sticking together in London will help maintain the good recruitment market that already exists in the UK, along with the skilled workforce of lawyers, bankers and compliance specialists that does not exist in such large numbers in other European financial hubs.
The costs of relocating
The past three decades have been a period of heavy investment in London by banks. They have not only invested in buildings but also in the city itself – they have spent time, effort and money to make sure the environment is the best for them to operate in. Most importantly, they have invested in their employees, recruiting and training them to become high-performing individuals. A move to a city outside the UK puts all this in jeopardy and could result in rebuilding this investment from the ground up.
The law
The UK’s legal and regulatory systems are viewed as fair and give banks the assurance they need; in addition, international banks often benefit from the number of double tax agreements the UK has with other countries, set up to ensure that customers do not pay tax on the same income in two different countries.
The culture
The UK offers a welcoming cultural environment for banks and their employees. Its similarity to the US business culture in the sector, plus the fact that the business language is English, makes it a comfortable place for large, international banks to operate from. The cultural locations that London offers are a sponsorship gold mine for banks and other financial institutions and would be hard to rival elsewhere.
While there probably will be some initial job losses as a result of the Brexit decision, the post-apocalyptic scenarios of a desolate London financial centre will be a far cry from reality. The City will recover and adapt and there will still be a fluid market for highly-skilled professionals.
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