Brexit, the potential withdrawal of the United Kingdom (UK) from the European Union (EU), remains the most pressing issue in the country and all options are still on the table. Since the referendum, many studies measuring the impact of Brexit were published. There is a broad consensus among economists and in the economic literature that Brexit will likely reduce the real per-capita income level in the UK.
A new report, from global recruiter Robert Walters and market analysis experts Vacancy Soft, has found that the departure from the EU could stifle the rapid growth of the fintech sector which currently generates £20bn in annual revenue and attracts more venture capital investment than any other country in Europe.
The ‘jewel in the crown’ for the country and the fastest growing sector in the country (job creation within the fintech space grew by 61% in London in 2018) is in the risk of a major slowdown.
Tom Chambers, Manager of Advanced Analytics and Engineering at Robert Walters, said:
“The number of tech roles within fintech grew by 37% in 2018 – a positive story for both the industry and the country. However, Brexit appears to be creating a fear of ‘last in first out’, which in turn means candidates are less willing to move roles as swiftly as they have in previous years – creating a lot less available talent in the market.
“The most disconcerting thing for the sector amid Brexit is the fact that a quarter of people working in tech roles in the UK are not British. The impact of uncertainty and talent shortages resulted in a slight slowdown in hiring activity late 2018 – with only London-based fintech companies with significant VC funding continuing to pursue aggressive recruitment campaigns. Talent shortages within IT have pushed salaries up by 8% in Q1, and we are already seeing some pretty impressive buy-back and counter-offers for IT talent within the fintech sector.”
The UK’s fintech industry attracted more investment than any other country in the first half of 2018, with over $16bn and London representing a third (39%) of European venture capital funding for fintechs, almost double any other city in Europe.
Financial Times estimated in October 2016 that should the passporting agreement with the European Union expire in the event of a Brexit, the British financial service industry might lose up to 35,000. Indirect effects could increase these numbers to 71,000 job losses. Oliver Wyman pointed to up to 75,000, with banks and other institutions forced to move large numbers of staff to locations in the EU27. Xavier Rolet, ex-CEO of London Stock Exchange Group, aimed higher and predicted job losses of more than 200,000.
A TheCityUK report published in March 2019 came to the same conclusion, that Brexit is making it more difficult for UK financial organisations to recruit technology talent.
TheCityUK is the industry-led body representing UK-based financial and related professional services, and the report states that fintech roles (digital customer interfaces, big data, Artificial Intelligence, machine learning, etc.) are the ones who create the most value in financial and related professional services.
The study found that Brexit has created concern over the availability of future tech talent from the EU as the UK’s departure will shrink the available talent pool of the best graduates.
A recent LinkedIn Workforce report, which surveyed 600 hiring and recruitment managers in the UK, found that up to 20% of graduates with the required tech skills in the sector are from the European Union and, since the referendum, there has been a significant decrease of graduates coming to the UK from France and Germany in particular. HR staff has seen a net migration of tech graduates back to the EU. “There is a risk that those talented migrants with the skills needed by the UK will leave before these skills can be replaced by home-grown talent”, said the report.
According to TheUKCity report, the Fintech market is worth £7 billion to the UK economy and employs 60,000 people. The market has attracted +154% more investment in 2019 than in 2018. This might prove that expectations are not so gloomy. In the first half of 2018 alone, total UK investment in FinTech reached $16bn.