What will Brexit mean for City contractors?

Among the many ponderables following Brexit, one of the biggest is the impact it would have on the City of London’s status as the world’s preeminent financial centre.

The banking and financial services sector is a vital contributor to UK GDP growth. The City plays a starring role, employing around 400,000 people, including many contractors who are lured by the competitive pay rates offered not only by the major financial institutions but also the many smaller enterprises trading in the City.

We cast our eye over all the key issues and what the future holds for contractors.

Will uncertainty surrounding Brexit reduce London’s predominance as the global centre for capital markets? Before attempting to answer the question, one must understand the significance of the City to the UK economy. Generating some £45 billion in 2015 (predicted to rise to £61 billion by 2021), the Square Mile accounts for 14% of London’s economy and 3% of the UK’s GDP. The latest employment data suggests that although the market has cooled, organisations are hiring and the demand for skilled contractors remains steady.

The City – a hotbed for contracting

The City has long been a destination of choice for IT contractors given the rates that companies are willing to pay for a range of specialist skills. Developers with mobile experience are particularly sought after given the increasing demand for consumer-driven solutions and the incessant rise of smartphone usage. Knowledge of HTML5, jQuery, Java, C++, C, Objective-C and Swift, Apple’s new programming language, is highly prized as is experience of responsive web design (RWD), as financial institutions continue to invest heavily on their online customer user experience (UX).

We’ve also seen a rise in the demand for business analysts, typically contractors who are brought in by organisations to integrate requirements and solutions that make business processes more efficient. Whether creating user documentation, analysing requirements or writing specifications to improve systems and procedures, the analytical business analyst can significantly reduce a company’s costs – a skill, which in the post-Brexit world of uncertainty will continue to be highly valued and is reflected in very competitive pay rates.

A recent survey by software provider Advance found that as many as one in four businesses did not have sufficient countermeasures in place to fend off cyberattacks while nearly half did not consider digital security when adopting new technology. Given the frequent nature of attacks, organisations cannot afford to underinvest in their security infrastructure and will increasingly turn to cyber security experts to set up the right controls to mitigate risk.

But contractors aren’t just finding projects in IT and technology (which accounted for 37,000 City jobs in 2015). With flexible working practices becoming far more widespread, there are growing opportunities for individuals from more traditional professional services backgrounds, such as finance and legal, to offer their services as contractors. Online assessment technical experts are also in growing demand, as the big City graduate recruiters seek to gain an edge in attracting top talent in today’s competitive environment.

Contracting jobs in the City

The City’s privileged status, alongside New York, as the leading global hub for banking and investment and providers of capital, is not in danger of losing “its gravitational pull in terms of management of capital” according to Barclays’ American Chief Executive, Jes Staley. However, if the 250 foreign institutions with HQs in the Square Mile were to up sticks and move away from London, then this would pose a risk for contractors, as the number of assignments would fall.

But most are adopting a ‘wait and see’ approach until they know more about the ‘hard’ or ‘soft’ Brexit landings. The latter option would of course allow foreign banks to keep their ‘passporting’ rights and continue to provide services to the EU and vice versa, a move that would preserve contracting jobs. Euroclearing, which gives London the right to clear $269 billion of Euro denominated trades and financial products daily, should also remain unaffected despite a court battle with the European Central Bank (ECB).

Clearly, the stakes are high for the City of London with much hinging on how the Brexit negotiations with Europe unravel. While there will inevitably be some pain, the current climate points to a less extreme Brexit outcome, which should futureproof the Square Mile’s special status and the jobs it generates for thousands of contractors.