Brexit and COVID-19 pushes UK finance sector to cuts jobs and re-evaluate the need for offices long-term

Kalila Sangster
·2 min read
A general view of the buildings in London's primary financial district behind the River Thames.
UK financial firms are expecting to axe more roles on 2021, as remote working prompts more employers to further consider cutting office space. Photo: PA

The UK finance sector cut jobs and re-evaluated the use of office space in the face of the coronavirus pandemic in the final quarter of 2020, the latest Financial Services Survey published by employers’ body CBI and compiled by consultants PwC found.

Financial services have shifted to remote working due to COVID-19 social distancing restrictions leading companies to review office space as cutting physical offices could help firms save on rents amid the financial uncertainty caused by the pandemic.

UK financial firms are expecting to axe more roles on 2021, as remote working prompts more employers to further consider redefining, reconfiguring or cutting existing office space.

The report also highlights that the trade deal struck between the EU and UK came into effect on 1 January 2021 does not cover financial services. UK-based companies’ ability to trade across the EU is reliant on the EU confirming Britain’s financial frameworks are aligned enough with its own rules under its “equivalence” system.

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“Meanwhile, work must continue on using existing pathways with the UK Trade and Cooperation Agreement to reach better outcomes for the financial services, particularly on equivalence,” Rain Newton-Smith, chief economist at the Confederation of British Industry (CBI) told Reuters.

Many London financial businesses have opened operations in the EU as they don’t expect the bloc to grant much direct access under equivalence.

The EU was the City of London’s biggest customer pre-Brexit.

More than 7,500 jobs and at least £1.2tn ($1.6tn) of assets have been moved from Britain to the EU since the referendum in 2016, according to consultancy EY.

“More work is yet to be done on the movement of people into roles in the EU and the migration of client contacts,” the survey said.

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Business volumes in finance sector grew for the first time in two years during the final quarter of 2020 as firms took these measures to weather the COVID-19 storm.

The Financial Services Survey, published on Wednesday, was completed before a third coronavirus lockdown was brought in across England from January.

“Unfortunately, the health and economic picture has sadly deteriorated since with restrictions tightening again,” said Newton-Smith.

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