Blog: It’s time to talk about Brexit



Neil Greene

Neil Greene, Senior Consultant – Financial Services, HRC Recruitment

 

It may come as a surprise that, despite the subject filling newspapers and dominating headlines for the past two years, some people still don’t want to talk about Brexit.

Among them are many in Scotland’s financial services community. Although last week Royal Bank of Scotland chief executive, Ross McEwan, aired his view that a no-deal situation on Britain’s departure from the EU could trigger another recession, in truth it was one of the few interventions we’ve seen from the industry.

Yet, the sector plays an undeniably important role in Scotland’s economy, valued at £12 billion by a report released earlier this year by TheCityUK. The same research found that the number of people employed in financial services, and related industries, in Scotland increased by 6.6% to 161,000 between 2016 and 2017, outstripping even London’s growth. Any negative consequences on the sector would not only be bad news for the financial community, but the whole of Scotland as well.

Financial services’ voice needs to be heard – but there is an almost deafening silence on what is likely to happen in the various permutations of Brexit. Admittedly, this could be because the real detail is yet to be agreed and the goalposts are constantly shifting. Perhaps that will all change as we approach March 29 2019.

But we still need answers to some important questions in the meantime. Will financial services companies keep their presence in Scotland in a no-deal scenario? Will they shift functions to Europe? Will London be most affected by any job moves? These are just some of the worries running through people’s mind at this time of uncertainty.

It’s ‘business as usual’, we’re often told – and perhaps it is. Barclays’ announcement that it will create up to 2,500 jobs at a new hub in Glasgow’s Buchanan Wharf is a huge commitment, which underlines the strength of Scotland’s offering as a base for financial businesses. Likewise, Morgan Stanley opened its new 155,000 sq. ft. office at 122 Waterloo Street, home to more than 1,400 workers, in July this year in another vote of confidence in Scotland.

Good news so far, then. However, all it would take is for a major financial services employer to announce it is leaving Scotland and, all of a sudden, the mood would turn. That happening may well be predicated on the introduction of tariffs and the UK’s future trading relationship with other countries, given the international nature of financial services companies.

So, unsurprisingly, it all depends on the deal. And, while the different iterations of that agreement seem to be expanding by the day, speaking very broadly, there appear to be three scenarios for Scotland’s financial industry.

A good situation would see us maintain a strong headcount, financial services remain one of the biggest contributors to the Scottish economy, while the companies that are already here look to grow – Morgan Stanley being a prime example of what could and should be achieved. This would be backed up by better engagement from London, recognising the talent Scotland has to offer at a comparatively cost-effective rate.

Somewhere in the middle, well, nothing changes – we remain as we are. In a way, this seems the most unlikely outcome of them all.

The bad would be banks relocating from across the UK to other parts of Europe because Brexit costs them too much to stay. As Mr McEwan suggested, a no-deal Brexit would be the catalyst for a recession and Scotland’s share of the financial services pie would shrink.

Which of these actually comes to pass is anyone’s guess at this point; but the fact remains that, as a community, we’ve not really had a grown-up conversation about Brexit. That needs to change if, we’re going to ready ourselves for the UK’s eventual departure from the EU – deal, whatever form it takes, or no deal.