Damien Kearney, Stafffinders newest team member, shares his thoughts on the much talked about EU Referendum and the widespread effects it will have throughout England and Scotland.
Damien joins the Stafffinders family as a Senior Banking & Financial Consultant after a seven year tenure as Head of Foreign Exchange Trading at Investec Asset Management.
Short to Medium Term effects in England and Scotland
Outlook: Negative. Scottish business will suffer in the short run, but England far more so – as this is where the engine room of the economy sits, along with most of the heavy industry (ex Oil).
The UK has voted to leave the EU on Thursday, which immediately caused shockwaves throughout the world. The FTSE sunk over 8% initially, and the Sterling plummeted over 10% versus the US Dollar. The markets seemed to recover and stabilise when the BoE governor reassured the markets that £250 billion would be available to oil the financial system – some more quantitative easing. I anticipate that this short term positive news will dissipate and the Sterling, as well as world markets, will start selling off again over the coming weeks.
In my view, for the UK, the job market will stagnate over the coming months. The largest American banks (JP Morgan and Morgan Stanley) have already enacted contingency plans to open Madrid and Frankfurt banking operations. Initially, it is estimated between 50,000 -70,000 jobs will be axed over the coming weeks in the City of London. Front office jobs will be in the firing line – with operational and back office jobs also uncertain. The redundancies will also feed into Industrials, Law, accounting, manufacturing and any company that has their European HQ in the UK.
In Scotland – the banking sector is predominantly occupied by crucial, highly specialist support functions, so these shouldn’t immediately be affected. In the Investment Management world, these firms will most likely see earnings fall, as a result of volatile financial markets and a squeeze on their management fees. There will be headcount reductions in Investment Management – they will be aggressive, but not as bad as banking – who unlike asset managers, require passport arrangements to conduct cross border financial transactions. The engineering, oil and commodities sectors in Scotland will remain suppressed as the global economy looks even more fragile. IT, infrastructure and accounting will also stagnate as projects, mergers and the need to audit as many firms as before dwindles.
Long-term effects for Scotland
Outlook: Could Scotland becomes the de facto powerhouse of the British Isles, and a major European Player?
Perversely, the UK leaving the EU could be an extremely positive thing for Scotland! The Scottish people voted overwhelmingly to stay in the EU, and as such the First Minister is voicing a call for another Independence vote. Now, if Scotland votes to leave the UK and join the EU – given the fabulous infrastructure already in place for law, banking, asset management, hospitality, and industry we have in Scotland, we could become a major economy in Europe.
Economic arguments aside – England have effectively alienated themselves from Europe: only London really voted to stay in the EU.
Scotland have emphatically voted to stay in, and as such this should solidify Scottish EU relations. London has always been the jewel in the crown for the British economy, and Frankfurt and Brussels have long been jealous of London’s financial success – will Edinburgh now become the bastion of finance for the British Isles? Quite possibly.
For Industry too – we have the Aberdeen facilities already in place, and we have a long history of manufacturing – with a skilled labour force. We could renegotiate terms of trade for importing and exporting (fishing, oil, gas, fracking, agribusiness) – giving the Scottish economy a more competitive edge and increased economic flexibility.
In my view, an independence vote has to be triggered ASAP to secure Scotland’s future economically and socially. Yes, it’s opportunistic, but it’s necessary. I was never initially a fan of independence, but the rules have now changed and the UK and the world is now a very different place.
The short term volatility and uncertainty will halt the UK job market, as businesses wait to what actions the EU and Westminster take.
However, in the medium term, if Scotland acts quickly, it can re-join the EU, and become an economic powerhouse in the EU. The current infrastructure, the increased talent pool which could migrate from London and good relations with the EU (and an alienated England) could result in a total swing from despair to real future success.
If Scotland does not join the EU – then the future of the jobs market remains uncertain in my opinion.
Not as uncertain as the English jobs market, but still uncertain. On the positive side, recruiters in Scotland will be able to tap into international recruiting markets for centres such as Dublin, Madrid and Frankfurt – I anticipate Scottish recruiters will be on more of an even playing field compared to non-Scottish recruiters because this huge rise in the “EU jobs market” will be fairly new to all recruitment players.
Having spent his career working in London, Damien has returned home to Scotland bringing with him over 10 years’ experience working in the Investment Management Industry.
Damien joins the Stafffinders Banking and Investment Services recruitment division, providing the team with valuable insight and market knowledge. Damien represents some of the most influential business in Scotland and England.
To find out more about Damien, or to discuss an opportunity, please call 0141 887 1155 or connect with him on LinkedIn.
Stafffinders holds a neutral stance regarding the EU referendum and subsequent outcome(s). This article means no disrespect, and the opinions expressed in this article are that of the author.