City of London Economic Research

Mapping financial services employment across London and GB

 

By Katharina Ehrhart, Researcher in the City of London Research Team 

 

In previous blogs we have looked at jobs growth in London and beyond, noting that nearly 663K, or almost two thirds of financial services (FS) jobs were based outside of London. This blog sets out where these FS jobs are concentrated across the country and the capital using the latest Business Register and Employee Survey (BRES) data which was published earlier this month.

Total employment in the FS sector has been broadly stable over the past 6 years, reaching 1,055,000 jobs across Great Britain in 2016, a growth of 2.5 per cent from last year. However, the pattern of employment is ‘spiky’ across and within regions, as well as within the capital.

London is home to the greatest number of FS jobs, 393,000, but FS jobs are spread across cities and regions in GB. In the map below, you can see patterns of FS employment at the district-level within regions – districts are colour-coded according to their percentage share of total FS jobs in GB (2016 figures).

Figure 1: Share of FS employment in GB 

 

 Source: BRES, 2016 data. The map was produced in GIS.

 

Outside London and the South East, it is clear that FS jobs cluster in the following cities: Edinburgh (3.4%), Leeds (2.2%), Glasgow (2.2%), Birmingham (2.1%) and Manchester (2.0%). Despite having the second largest number of FS jobs of any region (119,000 in total), there is no comparable urban cluster in the South East. The region likely benefits from its proximity to London with FS jobs in the ‘home counties’ of Surrey, Hampshire and Kent.

We also notice two areas with a lower share of FS jobs which are striking because of their size. On the one hand, there is Swindon (0.9%) and Wiltshire (0.8%) along the M4 corridor. At the south end of the North West region, there is Cheshire – made up by Cheshire West & Cester and Cheshire East with each 0.9% of the total FS jobs in GB. The latter underlines the importance of the North West as the region with the third highest FS employment (98,000 FS jobs in total).

There has been a significant growth in the number of FS jobs in London of 17.6% over the past six years. The second map shows the pattern of where these jobs are in the Boroughs of Greater London in 2016. Inner London accounts for 355,000 (90% of) FS jobs in Greater London with The City of London, Tower Hamlets (home to Canary Wharf) and Westminster accounting for three quarters alone.

 

Figure 2: Map of FS employment in Greater London 

 Source: BRES, 2016 data. The map was produced with a visualisation tool provided by GLA datastore.

 

Within these geographies, the composition of FS employment reflects local specialisations. We have divided the FS sector for simplicity into “banks”[1], “insurance”[2], “trusts & funds”[3] and “financial market administration”[4].

Insurance is the biggest FS employer in the South East with over 58,000 jobs (almost half of FS employment in the region). In the North West, banks provide most FS jobs, totalling 33,000 (one third of FS employment in the region). Financial market administration also provides significant employment in both regions.

In Greater London, banks are driving FS employment in the City of London as well as in Tower Hamlets with 64,000 and 45,000 jobs respectively. In the City of London, this is closely followed by insurance with over 58,000 jobs. Trusts & funds which includes fund management activities are very present in Westminster where they make up a high proportion of FS jobs (37% of FS employment in the Borough) Lastly, jobs in financial market administration which provide support services to the other three categories can also be found in significant numbers across all three Boroughs.

While FS jobs tend to cluster in some locations as we have seen above, they are important employers in cities up and down the country. FS firms directly employ more than a million people, largely in highly skilled and well-paid jobs, but they also play a vital role in cities’ business ecosystems indirectly, by driving demand for other services. As Fiona Morrill’s blog post titled “The Chain Reaction” shows that financial and insurance services are crucial in supporting the wider economy.

 

[1] SIC codes 64110, 64191.

[2] SIC codes 651, 652, 653, 6621, 6622, 6629.

[3] SIC codes 643, 6630

[4] SIC codes 6611, 6612, 6619

 

  

Jobs Growth in the City of London

 

By Dr Laura Davison, Head of Research at the Economic Development Office, City of London Corporation

 

This week has seen the annual release of the latest Business Register and Employee Survey (BRES)[1], which we use as the basis for our reporting of jobs and employment by sector. The latest figures estimate jobs as at 9^th September 2016, and here I’ve looked at both what the figures tell us about overall employment in the City of London (Square Mile), and how this has changed from the year before (i.e. the change from 2015 to 2016).

Across these 12 months, jobs in the City have increased from 455K to 483K (2016) – an increase of 28K jobs (6%). This builds on a strong pattern of growth in the City since 2010, where every year since 2013 has seen overall jobs growth, as shown in the following chart.

 

 

 

The bulk of the new jobs created in the most recent year have been in the City’s largest sector – finance and insurance. This accounted for 18K new jobs – an 11% rise to 182K total jobs, and equivalent to 64% of the City’s total jobs growth. Within this, banking (2.5K), non-life insurance (3K), insurance brokers (2.5K) and ‘other financial services’ (2.5K) were the largest growth components.

The other City sector showing notable growth was business administration, with 5.5K new jobs – a nearly 10% increase to 63K jobs; this built on very strong growth in the previous year also. This sector is wide-ranging, covering areas such as employment agencies, leasing office equipment, and building services – though in this instance, the majority of growth (3K jobs) fell into the ‘other’ category, followed by employment placement agencies (1.5K) and general cleaning of buildings (1K).

Professional services remains the City’s second largest sector, with 115.5K jobs in 2016. In contrast to 2014 - 2015, this period has seen a small fall in jobs (2.5K fewer, a drop of 2%). Within this, though, two of the three subsectors comprising ‘related’ professional services[2] have seen small jobs growth – a 2.5K rise in legal services jobs (to 61K) and a 1K rise in management consultancy jobs (to 31K), while the third area – accounting, has seen a small fall  (0.5K fewer jobs, now 17K).                

The information and communication sector, which has also shown strong growth in the City in recent years, has slowed this year, rising from 37K to 38K jobs (2.7% growth).

Other sectors in the City are both relatively small and have seen only small changes this year, although it is worth highlighting that construction has grown by 1.5K jobs to 7.5K jobs, and health similarly has grown by 1.5K to 7K jobs.

As the following chart shows, the balance of jobs in the City has remained very consistent. In 2015, the three biggest sectors accounted for 75% of jobs in the Square Mile – 36% financial services, 26% professional services, and 13% business services. In 2016, the overall figure remains 75%, split 38% financial services, 24% professional services, and 13% business services.

 

 

 

The data also reinforces the City’s role in wider London growth, where it makes up 9.4% of jobs. Net employment growth across London was nearly 71K new jobs, with the City accounting for the highest number of these (28K), followed by Camden (15K) and Hounslow (11K). 

 

[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/

businessregisterandemploymentsurveybresprovisionalresults/provisionalresults2016revisedresults2015

[2] Professional services is a very wide-ranging category, for example spanning areas such as architecture, research and development, advertising, and veterinary services. Here, ‘related professional services’ refers to those subsectors with the closest linkages to finance – legal, accountancy, and management consultancy.