Caution urged over claims of 10,000 job losses on first day of Brexit

Employers should be developing a long-term strategy, say experts, as EY sounds alarm over financial services industry

Experts have responded with scepticism to a report that predicted City firms could shed 10,500 jobs as soon as Brexit takes effect – but warned employers that they must focus on broader talent strategies in the face of ongoing uncertainty on the situation.

Accounting firm EY predicted on Monday that City firms could move 10,500 jobs out of the UK for European capital cities on “day one” of Brexit, with losses among both back-office jobs and client-facing roles spanning banks, insurance companies, asset managers and more.

The report was part of the company’s Financial Services Brexit Tracker, which followed 222 financial institutions during November. It found that 31 per cent of financial services firms have publicly stated that they are considering moving operations or staff out of the UK, with almost a fifth (19 per cent) confirming at least one relocation destination in the EU.

However, experts have expressed scepticism at the figures, suggesting such large-scale predictions are unrealistic while there is still so little information about the final outcome of Brexit.

“It is impossible to pick an exact figure for the number of job losses in specific sectors, as we still don’t know what the trading arrangements will be,” said Gerwyn Davies, the CIPD’s senior labour market analyst.

“CIPD research indicates that employers are still sitting on their hands, both in terms of workforce planning and in how they plan to respond to Brexit – so it’s hard to see how any estimate can be accurate.”

While it is the loss of full access to European financial markets that is troubling the City post-Brexit, other industries are worried about losing access to EU employees more immediately. The Telegraph has reported fears among auto manufacturers that foreign staff will not return to their jobs after the Christmas break, while a recent British Medical Association survey of more than 1,700 doctors who gained their primary qualification in another European country found that almost half (45 per cent) were considering leaving the UK by the time it leaves the EU.

A report published by the European Commission last week as part of Brexit negotiations sought to alleviate ongoing uncertainties over the futures of EU nationals residing in the UK, stating that they would be entitled to remain in the country and would be eligible for permanent residency rights. In addition, Tier 2 migrants will not be required to demonstrate continuous employment throughout the qualifying period to be eligible for settlement.

"While there are reports of concerns rising over the loss of skilled EU workers from the UK in some sectors, the recent statement on EU citizen status provides some much-needed clarity for employers and stability for EU workers after last Friday’s joint EU-UK agreement,” Diane Gilhooley, global head of Eversheds Sutherland’s human resources and pensions practice, told People Management.

“However, with some remaining uncertainty as to the immigration rules that will apply to EU citizens who wish to come to the UK after Brexit, we anticipate that employers will also continue to focus on broader talent strategies, including reviewing pay and conditions as well as boosting recruitment pipelines such as apprenticeships and skills training.”

Davies added: “Communicating the messages of the EU agreements is a vital first step in reassuring staff they will be able to stay in the UK, have access to public services and enjoy the same rights as other citizens. However, in looking ahead, employers should still be conducting audits of their workforce and putting a workforce planning and development strategy in place, to ensure that if there is an exodus of EU nationals they are well placed to fill the role with UK workers.”

The broader economic outlook remains pessimistic, with a study published last night by US think tank the Rand Corporation warning that the UK will be economically worse off after leaving the EU in most plausible situations. Should the UK exit with no deal and operate under World Trade Organization trade rules, the study predicted that future GDP would be reduced by around 5 per cent over 10 years – amounting to a loss of £105bn, or £1,585 per head of population. A similar report published on Friday by the House of Lords warned that a no-deal Brexit could lead to the loss of 75,000 jobs in the City and £8-10bn in tax revenues, and cause 20 per cent hikes in the price of food.