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

Are Britain’s bankers an endangered species? Nearly actually not. However are they one in decline? Probably.

The variety of bankers within the UK has been shrinking. This June, the variety of individuals working within the monetary companies and insurance coverage trade fell to its lowest degree since September 1987, based on figures from the Workplace for Nationwide Statistics. Not solely are Metropolis goals of a deregulatory Massive Bang 2.0 reinvigorating the sector receding, employment within the monetary companies is again to the extent of a yr after Massive 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 residence to Europe’s largest inventory market? Possibly.

The very first thing is to place the figures in context. Monetary companies 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 mild, a drop to 1.07mn this June doesn’t appear so dangerous. It might be short-term. In case you use survey information from staff as an alternative of the trade data that’s the ONS’s most popular measure, there hasn’t been a drop in any respect.

Nonetheless, taking the popular measure, there was a transparent decline because the 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 yr.

It’s not totally 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 variety of potential culprits. Department closures as shoppers shift their banking on-line is an apparent one. Banks argue that they will redeploy department employees, and a few cuts will come from extra normal automation. However worker numbers on the huge excessive avenue 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 adjustments. Some jobs that had been as soon as accomplished in-house by banks will now be accomplished by exterior tech suppliers. The enlargement of the fintech sector might imply jobs that had been as soon as classed as banking roles at the moment are know-how ones. Progress within the variety of IT roles has far outstripped the decline in monetary companies.

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

The evidence exhibits that the direct Brexit impression on job numbers was far more limited 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 traditional as each evolve as competing jurisdictions for the monetary companies sector.

New Monetary’s evaluation signifies that the UK’s decline hasn’t been repeated elsewhere, with monetary companies 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 developments, it’s onerous to unpick the place the UK is likely to be dropping out.

The larger fear, argues William Wright of New Monetary, is the divergence between developments within the trade and the broader financial system because the finish of 2020 — what one would possibly time period the “lacking” British banking jobs.

Wright estimates that there could be about 91,000 extra jobs had development in monetary companies employment stored tempo with the remainder of the UK financial system because the Brexit referendum. And, he argues, that issues on condition that jobs in monetary companies 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 companies industries similar to regulation and accounting. Official figures from the Nomis database present attorneys and accountants now outnumber bankers (although not monetary companies staff extra broadly).

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

Nonetheless, that 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