Jobs market indicates that UK economy may be heading for a new recession, warns Research Group

The Enterprise Research Centre has indicated that the recent surge in employment may not only be a fluke, but an early warning sign of an approaching recession.

The Enterprise Research Centre, a research network focusing on research into business and industry, has released a research paper on the proportions of jobs being created and destroyed over the past year in the United Kingdom, using data collected from the Office of National Statistics.

The research paper compared job market data between 1998 and 2018 from the Office of National Statistic’s Business Structure Database.

Overall, last year saw 4.9 million jobs either created or destroyed in the economy, in what was described by the Group as a “jobs churn” in the private sector. This is equivalent to 23% of all private sector employees either being fired or hired in 2018 alone.  

Established companies that had been set up and operating since before 2018 had created 1.65 million jobs in 2018, however this was vastly outweighed by an overall loss in jobs of 2.25 million, which is the highest number of jobs destroyed since 2010, at the height of the last recession. This led to a net loss of around 613,000 jobs from existing businesses in the private sector.

Around 1 million new jobs were created by start-ups, or companies that had just been set up and had began operations in 2018. This led to a net positive figure of employment in the jobs market of around 400,000 in 2018, a figure that was widely endorsed as a large success by the Conservative Government when the data was published earlier this year.

However, the total number of jobs lost last year was 17% higher than previous years.

The rate of births in the country has also slowed, and the number of deaths has steadily risen since 2016. This has led to many English regions, such as Yorkshire and parts of the East of England, to see the number of deaths exceed the number of births in 2018, leading to a decline in the total population. The death rate in the UK has not exceeded birth rates since the recession period between 2008 and 2012, where the number of deaths rose to a height of almost 5% above the birth rate for the United Kingdom.

Following a net high in the private sector job creation over recent years, despite a seemingly positive sign of an increasing number of the population being in employment, 2018 has seen a drastic change in the composition of the jobs market, seemingly indicative of the jobs climate in pre-recession Britain, with a similar pattern seen in 2005, 2006 and 2007 under ONS data. This could possibly indicate that the UK is heading towards a period of unsustainable growth followed by a sharp decline in the economic stability of the country.

UK will lose £800 billion in financial assets because of Brexit, report estimates

A report by the New Financial Group released today has identified 275 banking and finance firms that have moved or are in the process of moving staff or assets away from UK jurisdictions into European Union countries.

It was found that 250 firms have chosen a specific “post-Brexit hub” for business to the European Union, and 210 are setting up new corporate and legal entities in the European Union to manage business into the Nation Block.

Estimates have predicted that investment firms and banks will relocate around £800 billion in assets, and a further £65 billion in direct funds, to financial centres outside the United Kingdom either during or after a Brexit deal has been finalised and enacted.

The New Financial Group has presented a vastly different overview of the financial landscape originally predicted in past reports, with more than 40 firms moving assets to more than one city within the EU.

The report has also highlighted the top 5 EU cities benefiting from the relocation through added business traffic, with Dublin being seeing the largest economic benefits with over 100 firms relocating assets into the city- around 30% of all the asset migration identified by the New Financial Group.

This is followed by several mainland European cities including Luxembourg, Paris, Frankfurt, and Amsterdam, all seeing at least 30 firms relocating assets or staff to each city.

The report has also shown different migratory patterns for different financial sectors, with the majority of hedge funds and private equity firms moving to Dublin, and almost 90% of the assets being moved to Frankfurt are from investment banks.  

The predictions outlined in the report have also been theorised to only increase in the future as the deadline for Brexit draws closer. Local regulators within the European Union may require firms to increase local operations in European financial centres following the United Kingdom’s formal exit from the Union, and as the final Brexit deal changes more businesses may be required to move assets into European Union jurisdiction to keep unrestricted access to the free market.

In the financial banking industry, the majority of the damage incurred from Brexit occurred between the immediate economic fallout from the aftermath of the Brexit Referendum in 2016 and last year, when it was realised that the final Brexit deal would put the United Kingdom at a significant economic disadvantage on the international stage in the field of investment banking security. Many investment firms have already pulled out the majority of their assets where possible into more stable markets as economic uncertainty becomes more prominent in British finance. It would be an accurate prediction to estimate that firms will not relocate back into the United Kingdom until the economic uncertainty and fallout from the formal Brexit process due to begin later this month has settled and British markets have regained a relative state of consistency. Whether this will take a few years, or several decades, is something as of yet to be predicted.