By Robert Clear, Researcher in the City of London Research Team
The UK’s finance and professional services (FPS) sector is highly dependent on international talent, with workers from abroad holding 12% of its jobs. With EU citizens’ future work and residency rights unclear, and in light of the Government’s pledge to reduce immigration to the tens of thousands, there is a risk that the industry’s access to international talent may diminish. Here we take a brief look at how dependent FPS is on international workers, comparing London with the United Kingdom as a whole.
In 2016, 92% of all jobs in the UK were occupied by British nationals, with most of the remainder held by EU citizens, who occupied 5% of all jobs, compared to 3% held by people from elsewhere in the world. In London there was a marked slant towards international workers, who held slightly under a quarter of all jobs. The majority of these were from the EU (15% of the whole vs. 9% from elsewhere) – reflecting the trend at the national level.
London, the centre of the UK’s finance industry, was home to 35% of all FPS jobs in 2016 – 432,000, compared to 811,000 for the rest of the UK (i.e. excluding London). And the capital’s overall reliance on foreign workers in the case of finance and insurance is considerable. 78% of jobs there are held by British workers, with 13% from the EU and 9% from elsewhere – whilst outside the capital around 95% of FPS jobs are British, with 2.5% held by EU citizens and 2% by foreign nationals.
The ONS data available to us on nationalities in FPS subsectors is limited to ‘British’ and ’other nationality.’ But even from this we can see variations in the dependency on foreign talent. The groups ‘financial services except insurance and pension funding’ and ‘activities auxiliary to financial services and insurance’ both have levels of foreign workers close the the average level for London: 73% and 80% respectively. In ‘insurance, reinsurance and pension funding,’ however, only 10% of workers are from outside the UK. This is closer to the levels of foreign FPS jobs in the UK overall.
The disparity between London and the rest of the UK in its dependence on international talent is marked. Not only is there a greater proportion of foreign workers in FPS in the capital than in the country as a whole, but the sector itself is London’s fourth largest employer – after ‘professional, scientific and technical’ [625,000], ‘human health and social work activities’ [555,000] and ‘education’ [514,000]. This means that policies to significantly reduce access to international talent will have a significant impact both on the sector and on London’s economy.