London’s location, infrastructure and a constantly growing pool of highly-skilled university graduates, means that for many companies it will simply be “too impractical” to move talent elsewhere after Brexit, according to one of the world’s biggest commercial real estate companies.
Colliers International, which operates in 68 countries, compiled a report in which 20 major cities were ranked in terms of talent, location and cost.
The research examined the size and orientation of economic output and the workforce in each city, the capacity and skill set of what Colliers calls the “latent and emerging talent pool”, the cost and affordability of the city as a place to live and save, as well as the country risk associated with that market, and the risks and challenges presented by labour laws.
“It has been several weeks since Theresa May pulled the trigger on Article 50 and it would already appear that some financial institutions are starting to make plans to relocate part of their business overseas,” said Guy Douetil, the managing director for corporate solutions for Europe, the Middle East and Africa at Colliers.
He said that companies like Goldman Sachs have already made contingency plans for job moves even before Brexit negotiations have properly started, but that there’s a good chance that job moves are more limited than many project.
“Despite any initial real estate cost savings, relocation costs would offset this and in reality, no single city in Europe has the capacity to absorb any mass migration of jobs from London at short notice. Initial estimates quoting the potential re-allocation of up to 100,000 jobs seem very wide of the mark at present,” Mr Douetil said.
He added that a re-allocation of this scale “would need to be distributed across a number of cities possessing the latent talent with financial banking services skills”. Even then, he said, this could lead to labour cost hikes.
“At present, the number of jobs reported to be considering moving from London are less than 10 per cent of this figure. At the same time, we have seen re-affirmations of long-term interest in the UK capital from significant global businesses.”
Earlier this month Lloyds Banking Group reportedly chose Berlin as the location for its European hub after the UK leaves the EU, but the Colliers report highlights Berlin’s “over-dependence on the public sector” as a key shortcoming, “despite all the positive growth surrounding the development of tech, media and telecoms operators in the city”.
The insurance market Lloyd’s of London, meanwhile, has confirmed that it will be setting up an insurance company in Brussels, to secure a European foothold after the Brexit. Colliers in its reports, however, argued that Belgium had the weakest score of all countries from a labour market regulation perspective, putting it in 18th spot in the overall ranking.
Frankfurt has also been touted as a likely choice for companies to relocate to after Brexit, but Colliers said that the home of the city, which is European Central Bank, suffers from both a lack of capacity, and being relatively expensive, compared to other European cities.
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