By Isabelle Almeida, City of London
The City: big business and financial services?
The City of London, or Square Mile, is often thought of as the home of big businesses and banks, and that is of course true – up to a point. Employment in the City is highly concentrated in large firms and financial services, with 147,600 people working in finance and insurance, equal to around 38% of total employment, and over half of people employed in the City working in just the 200 or so largest firms based here.
However, the picture is more complex than that. Whilst those large firms of over 250 staff may employ many of the City’s workers, they make up only 2% of the 15,000 enterprises here. The remaining 98% are small and medium-sized businesses from all sectors, and 80% are micro businesses with fewer than ten employees.
Meanwhile, the City’s financial enterprises may be its biggest employers, but they comprise only 16% of its firms, with other sectors including professional and support services, technology, media and telecoms (TMT), and insurance each playing a major part in the City’s interdependent commercial ecosystem.
The City of London drives economic growth across the UK – and this is forecast to continue…
With a high concentration of skilled, relatively well paid but also highly productive jobs based here, the City’s workers are responsible for creating a total £48.7bn in total economic output in a year – equivalent to £760 generated for every single UK resident. The Square Mile is a major centre of employment in the UK: with close to 400,000 workers the City provides one in every hundred jobs in the whole of the UK.
Different forecasters suggest different projections for the City’s rate of growth, but there is an overall agreement, based on current evidence, that the City is likely to continue to flourish. Oxford Economics forecast robust growth for the Square Mile’s employment in the next decade, higher than the UK average, and reaching 485,400 jobs by 2023.
So the City is, and is set to continue to be, a key driver of the UK economy in terms of jobs and economic output.
… but there are changes happening in the City’s sector profile – the growth is coming from other industries
So the financial services industry remains a key part of the Square Mile’s DNA, dominating employment as we have seen, it grew by 18%, or nearly 11,000 jobs between 2009 and 2013. So there is no sign that it is in decline. However, it is true to say that the City’s sector profile is starting to shift, with growth in finance slowing compared to other sectors: it is these other sectors that will be driving the City’s growth in the coming years.
Professional services forecast to have biggest growth
Professional services, though starting from a lower base, proportionally, of the City’s jobs, grew by 29% with 25,000 new jobs in the sector in the same five years to the end of 2013. This growth in professional services is expected to continue: a total of 15,000 new jobs in the City are predicted over the coming two years, and more than half of these expected to be in professional services.
TMT is also growing in significance
It’s not only professional services that have been growing in importance in the City’s economy. Although growing by fewer jobs in absolute terms, employment in TMT grew by a proportionally huge 42%, with 8,900 new jobs in the same period. The sector’s development is predicted to expand further – with an additional 5,000 jobs in TMT by 2023.
Analysis of the City’s real estate market bears out the idea that TMT firms are becoming more significant, with TMT companies accounting for almost a quarter of take up of City office space, up from just 7-9% of take up in the five years up to 2009.
Working patterns and office space
There are signs, too, that the nature of the workforce and its working patterns are beginning to change. As the industries represented here and the workstyle preferences of the City’s relatively young and skilled workforce evolve so too do City firms’ accommodation needs, with demand for serviced offices growing, and research into changing workstyles showing that the design of both traditional offices and the public realm that surrounds them in the City are changing to become more flexible, and permeable.
The changing face of the City
By looking at trends, changes and predictions relating to the City’s economy, firms, industries, employment and property, we can start to address the question: what will the City of London look like in ten, twenty or fifty years?
Read more in our statistical briefing on the Changing face of the City of London, available to download from the City of London's research webpages.