In terms of Brexit winners and losers, the UK’s resilience and attractiveness will shine through in the end – but the reality is that it will lose jobs. So if businesses have to relocate roles, who will benefit most?
For example, the prestigious European Medicines Agency and European Banking Authority will leave London following Brexit. Of the remaining 27 countries in the bloc, 21 have applied to house them. That’s a lot of competition for the hundreds of jobs on offer!
But which country will win the most Brexit jobs? And why?
I have just come back from Germany, visiting our JLL offices in Düsseldorf, Munich and Hamburg, and was really impressed. We have come to expect well organised and highly educated people, but for me the great surprise was the vision and clarity of purpose in many of the cities.
For a long time Germany has operated in a series of federated states each with their dominant cities and delegated economic powers, so have benefitted from many years of focussed, City leadership. Other European cities are just starting to get such powers devolved. If Germany proves to be one of the big Brexit jobs winners, I won’t be surprised.
A natural home for global financial services
If the UK loses “passporting” rights for the financial services industry to operate across the EU, I expect the loss of 50,000 jobs (mainly in London) over the next 5-7 years – about 5% of the London workforce.
And where will these jobs go?
Frankfurt has attributes like high quality office stock, a range of cultural activities, international-friendly employment law, and good schools; the factors that attract businesses and talent. Morgan Stanley, Citi, Standard Chartered and Nomura have picked Germany’s financial hub for their new EU HQs, with Goldman Sachs and UBS considering similar moves – over 3,000 jobs are already expected to move to Frankfurt, with the likes of JP Morgan yet to announce its intentions.
What gives Frankfurt extra advantage is access to quality, local talent. For example, the Frankfurt International School, with students from over 50 nationalities, is evidence of an international workforce who are already “at home”; so less pressure to entice foreign staff as the workers are already there.
When you consider that the European Central Bank is also based in Frankfurt, quite clearly it’s a natural home for global financial services.
Germany’s Big 7 Cities + more
With 81% of investment in the Big 7 going to cities other than Frankfurt in H1 2017, there are other reasons why Germany would be attractive to employers.
- If the aim is to replicate the dynamism and diversity of London, look no further than Berlin. It has everything from government to art, from architecture to innovation and technology. In fact, if Berlin had an effective international airport (which they will surely resolve in the next five years), I believe it would compete with Paris and London as global Super Cities.
- A big surprise for me is Düsseldorf. It’s a small city in terms of immediate population (~600,000) – but draws on a catchment of 14 million within a one-hour drive. And when you consider it has the highest population of Japanese people in Europe (after London), you appreciate the potential is more significant than just local business expansion. The place has a vision to grow which is beyond the expectations of many other comparable European cities, and you can see it in the market – office take up is up almost 20% versus last year.
- And let’s not forget that in Rottweil, a small town in south Germany, they’re testing lifts that use maglev technology, with the ability to move horizontally as well as vertically. Apparently, by removing the need for traditional cables, buildings could theoretically go miles high.
Germany really can support a wide range of jobs and industries.
“For a Germany that we live in well and willingly” (Angela Merkel, Chancellor)
What underpins all this is political stability. Businesses don’t like uncertainty. Angela Merkel has been in power since 2005, and is expected to be re-elected Chancellor following the German Federal elections on 24 September. With her commitment to open markets, as politicians go, she’s one of the most respected by business leaders.
Germany is the heavyweight influence within European politics, and a major player on the world stage. Why wouldn’t you want to work there?
I firmly believe the overall impact of Brexit on the UK will be minimal in the long term, and for London possibly negligible. No one location will be the sole beneficiary of London Brexit jobs relocating. Germany does have its challenges – in particular an ageing population – but if those jobs do go to Germany then they will be in safe hands.
I’ll be back in Germany in October for the EXPO Real trade fair and conference in Munich. For me, it’s an opportunity to see how JLL can help investors achieve their goals, but it’s also the chance to hear from others what attracts them to Germany.
For more information on the German market see the latest Big 7 Office Market Overview.