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What could Brexit mean to London?
24th October 2016
The historic decision made by Britain to leave the European Union has seen many people come out and say that there will be profound changes within the UK.
Some people believe that London, which voted by a margin of 60-40 to remain, will be affected the most by the decision to leave the EU. One of those figures is the capital’s new mayor, Sadiq Khan, who recently said in an article on the Financial Times that Brexit had raised doubts with businesses located in the city.
Brexit could impact UK law as well with the likes of conveyancing, employment and trading all potentially being affected.
So with this in mind, we take a look at how London and its international banks and other multi-national businesses could be affected.
One of the major concerns for businesses with offices in the city and for those working in legal jobs in London has been the potential impact on trade.
London is renowned for being the headquarters of many international firms and any impact on trade could see these businesses decide to relocate.
But, Janine N. Truitt, Chief Innovations Officer at business strategy and management consulting firm Talent Think Innovations, LLC, doesn’t think the decision will be disastrous as long as the negotiations are diplomatic.
She said, “Brexit presents a case for precedent as it pertains to governmental, diplomatic and trade relations between the UK and the EU. I don’t believe there will be any substantial impact to employment and/or trade in the near-term as negotiations for Britain’s exit have yet to begin and are not likely to conclude until 2019.”
Mrs Truitt, who was also named one of the Top 100 Most Social Human Resources Experts on Twitter by the Huffington Post and owns the blog The Aristocracy of HR, added, “While the Brexit vote was believed to be disastrous for Britain almost immediately, I believe any sustaining damage will be done if they take what experts are calling a ‘hard’ stance on their exit from EU during negotiations. This ‘hard’ stance includes their primary objection to the EU’s free movement/ pro-migrant approach.
“Objecting to this model during negotiations, could cast Britain in a xenophobic light if not handled correctly. The effect of such a perception could prevent other countries from doing business with the UK as well as hamper the labour market – if the UK continues to support a nationalist approach to immigration.
“Any disruption to the UK’s ability to trade across the EU and beyond will undoubtedly cause economic ramifications for them. Diplomacy in their negotiations is highly advisable.”
One of the main topics of debate is how recruitment in London could be affected and whether businesses will look to stop recruiting or whether candidates will instead opt to work in other cities in the world.
Craig McCoy, Chair of the London HR Connection, said, “The London HR Connection takes regular soundings from our members who represent senior London-based HR practitioners. We recently held a focused debate on Brexit with expert panel members including a senior employment lawyer, a leading head-hunter and the editor of the HR industry's official magazine, People Management.
“Whilst many of the employment-related implications of Brexit are as yet unknown, the prevailing view amongst our panellists and broader HR community is that Brexit may reduce the attractiveness of London (and the UK in general) as a career option for the best global talent and there are already some early indications of this.
“Restrictions on mobility of skilled workers into the UK is also likely to result in critical skills shortages which will damage the competitiveness and productivity of the UK on the world stage. As a community, HR professionals are extremely concerned about the potential long term negative impact of Brexit on our ability to attract and retain the best global talent.”
Sadiq Khan has revealed that since the decision to leave the European Union was announced that he has spent a lot of time with chief executives, entrepreneurs and investors to tell them that London is open.
He said, “It’s not simply a state of mind or an attitude — it’s what we are: open for talent, for business, for investment.”
The impact on London’s financial centre
According to a report by PWC, the main impact of Brexit will be on the City of London’s financial sector, with many of the big employers in banking worrying about the UK losing Single Market access.
This would mean UK and EU firms being unable to passport financial services businesses, products and services in and out of London.
Now many other European cities are trying to encourage these large banks to relocate. Sadiq Khan revealed that Milan, Frankfurt, Paris and Dublin were just some of the cities trying to “pinch our work”.
Although other cities have been trying to woo City of London bankers, most potential destinations have not been seen as suitable.
According to a piece on the Financial Times, Paris and Frankfurt have been seen as problematic, whilst Dublin is still regarded as a relative backwater.
The article believes that large banks located in London will instead spread staff out across a number of locations and these include Dublin, Paris, Frankfurt, Lisbon and Warsaw.
Some experts believe that large insurance companies based in the city could relocate to Asian financial centres, such as Tokyo and Singapore.
Whilst Brexit has undeniably caused concern, it is still too early to answer what the true impact of the decision will have on London. Once negotiations about the UK leaving the EU begins, we will have a better insight.
But as Sadiq Khan has said, London is still very much open for business, which is good for people working in lawyer jobs and everyone else!
Image Credit: nito (shutterstock), BlueSkyImage, Pictures of Money, Andrey Burmakin.