The curious case of Britain’s ‘lacking’ banking jobs

Are Britain’s bankers an endangered species? Virtually definitely not. However are they one in decline? Presumably.

The variety of bankers within the UK has been shrinking. This June, the variety of folks working within the monetary providers and insurance coverage trade fell to its lowest degree since September 1987, in response to figures from the Workplace for Nationwide Statistics. Not solely are Metropolis goals of a deregulatory Large Bang 2.0 reinvigorating the sector receding, employment within the monetary providers is again to the extent of a 12 months after Large Bang 1.0, as capital markets think-tank New Monetary factors out.

So ought to this be one other supply of angst for an already anxious Metropolis, displaced this week by Paris as dwelling to Europe’s largest inventory market? Perhaps.

The very first thing is to place the figures in context. Monetary providers employment by no means made it again to pre-crisis ranges. It’s been hovering across the 1.1mn-1.15mn mark for many of the previous decade: in that gentle, a drop to 1.07mn this June doesn’t appear so dangerous. It could possibly be non permanent. In case you use survey information from employees as a substitute of the trade info that’s the ONS’s most well-liked measure, there hasn’t been a drop in any respect.

Nonetheless, taking the popular measure, there was a transparent decline for the reason that finish of 2020. And after holding fairly regular since 2016, the proportion of the workforce employed within the sector did hit a brand new low of three per cent this 12 months.

It’s not solely clear what’s been driving the slide, besides that it does appear peculiar to banking quite than insurance coverage or fund administration.

There are a selection of potential culprits. Department closures as customers shift their banking on-line is an apparent one. Banks argue that they will redeploy department workers, and a few cuts will come from extra normal automation. However worker numbers on the huge excessive road banks have hardly been booming. NatWest shed 28 per cent of its workforce — simply over 23,000 jobs — between 2016 and 2021 because it coupled a post-crisis retrenchment from funding banking and worldwide operations with department closures. Lloyds misplaced 18 per cent, or 12,500 roles.

There are additionally wider technological modifications. Some jobs that had been as soon as achieved in-house by banks will now be achieved by exterior tech suppliers. The growth of the fintech sector could imply jobs that had been as soon as classed as banking roles at the moment are know-how ones. Development within the variety of IT roles has far outstripped the decline in monetary providers.

Then, after all, there’s Brexit. The decline in monetary providers jobs picked up on the finish of 2020, when the UK left the EU’s single market.

The proof exhibits that the direct Brexit impression on job numbers was much more restricted than assumed on the time of the 2016 referendum. However, as Andrew Pilgrim of EY factors out, “job shifts between the EU and UK aren’t over”. It’s extra that they’ve turn into a part of enterprise as standard as each evolve as competing jurisdictions for the monetary providers sector.

New Monetary’s evaluation signifies that the UK’s decline hasn’t been repeated elsewhere, with monetary providers jobs development within the US, Canada, France and Switzerland since mid-2016 (although that’s not been true of Germany, Italy and the Netherlands). With the pandemic muddying employment tendencies, it’s laborious to unpick the place the UK is perhaps shedding out.

The larger fear, argues William Wright of New Monetary, is the divergence between tendencies within the trade and the broader financial system for the reason that finish of 2020 — what one may time period the “lacking” British banking jobs.

Wright estimates that there could be about 91,000 extra jobs had development in monetary providers employment saved tempo with the remainder of the UK financial system for the reason that Brexit referendum. And, he argues, that issues provided that jobs in monetary providers are usually higher paid than common, with penalties for the nation’s tax take.

That disquiet must be eased considerably by the stellar development in associated skilled providers industries comparable to legislation and accounting. Official figures from the Nomis database present attorneys and accountants now outnumber bankers (although not monetary providers employees extra broadly).

There could possibly be trigger for concern if the decline in banking jobs signalled the diminishing standing of the UK’s monetary providers sector extra typically — however that’s a far broader query. Extra possible, as Sarah Corridor of the College of Nottingham suggests, is that the figures “fall right into a wider image of stability in monetary providers however not fast development”. 

Nonetheless, which may not provide a lot consolation to a sector looking for to revitalise itself and re-establish its world pre-eminence.

cat.rutterpooley@ft.com