Drip. Drip. Drain.
Much attention in the past year revolving around Brexit has focused on the impact of who will move where: In the midst of talks on immigration, which firms will leave the U.K. for the Continent, and where will workers work? Where will non-British professionals choose to live and labor?
The exodus of skilled labor may be significant, according to a recent Deloitte study, which found that, as noted in The Guardian, roughly one-third of British workers are of the mind to leave the United Kingdom. That shakes out to 1.2 million jobs, taken against a backdrop of 3.4 million migrant workers in the U.K. Within that tally, 47 percent of workers defined as highly skilled EU workers may leave the U.K. within a half decade. Deloitte had surveyed more than 2,200 workers based both within and outside the EU.
One reason for the exodus is simply financial. The pound does not buy what it once did. The currency is a casualty of last year’s vote and is down 13 percent in the past year, as measured against the euro, and as measured post-vote. It makes sense to think that people go where their wages can give them the most bang for their buck (oops, we meant pound).
It should also be noted, as the Guardian pointed out, that the survey took place before the June elections that handed Prime Minister Theresa May a tough defeat and threw some of the more rigid aspects of a “hard” Brexit into question. The Deloitte survey found that the U.K. has its lures, with the locale an attractive place for employment, at least as measured by respondents based outside the region, with 57 percent saying the U.K. remained within their top three destinations, professionally speaking.
Interestingly, the U.K. places ahead of the United States. But workers within the U.K. saw things differently, as 48 percent state that the country is a “a little” or “significantly less” attractive as a place of employment amid the new Brexit landscape.
The drain to come may be most notable within the highly skilled EU worker set, as 65 percent have said that the U.K. holds less appeal post-Brexit.
Drip and drain, then, as skilled labor shortages have hit hard, with Recruitment and Employment Confederation numbers have shown that it has been hard to fill labor needs across five dozen separate roles, including IT specialists, which implies rocky rows to hoe for tech firms.
Consider the fact that jobs site Indeed has estimated that one in 10 jobs created in the U.K. has been in the tech field. That, of course, would encompass burgeoning fields such as AI and data science, as Bloomberg reports, which implies a need for the most highly skilled among skilled workers (and, of course, these fields are part and parcel of the payments industry, among others).
So, with a talent exodus, an uncertainty of where firms will land and just what it all might mean, is it any wonder that some investment flowing into the region per payments firms — and, in particular, FinTech — has seen a bit of a slip, to put in mildly?
The trade industry entity known as Innovate Finance estimated earlier this year that investment in the U.K.’s FinTech firms has declined by more than 33 percent in the wake of Brexit, to $783 million, versus $1.2 billion in the previous year. The sector itself, according to Innovate, is home to about 135,000 jobs, and passporting rights may impact the direction of new jobs — flowing, say, to Berlin and Amsterdam, among other cities.
And yet when it comes to FinTech, some firms see opportunity where others see difficulty. Square, for example, has launched in the United Kingdom, with an eye on smaller retail shops looking to make inroads into more payments avenues. Obviously they see potential amid longer term trends in payments and for small businesses, regardless of the near-term rockiness that may bedevil negotiations through the next year or so.
In another example, Intercom, a U.S. startup focused on communications offerings for businesses, has signaled its intent to open its first London office this year. Management has said the firm will begin hiring immediately upon open.
Though these are isolated cases, they do imply that some firms — such as Snap and Slack Technologies — see some international opportunity, and that the U.K. is a place they want to be as a launching pad or hub. Lest you think these are isolated incidents, think again. Google is taking up office space in London, Apple signed a lease too and Facebook and Amazon are beefing up already existing presence in the U.K.
Meanwhile, as has been relayed in this space and elsewhere, some of the biggest of the biggest banks are looking to move at least some of their operations, and thousands of jobs, out of London. At least a dozen banks have stated they have at least some plans in place to bring operations to the Continent, among them UBS and Goldman Sachs.
There’s also a deadline in place for financial firms to lay out their plans more concretely to the Bank of England this month. So we will get a better sense of just how the exodus — Brexodus, or whatever term you’d want to put in place — might shape up in terms of real jobs, financial impact and implied (and real) investment in both the U.K and the Continent.
In the meantime, to paraphrase Louis XV, “apres Brexit, le deluge.”