Goodbye London! Is the capital losing its appeal with businesses and professionals?
London. A city where professionals from all over the world come to make it big and where businesses prosper. If you want to be where all the action is, then London is the ultimate place to be. Or is it? Despite recently being crowned Europe’s top city for business by a US think tank, it seems that the UK capital may be losing some of its appeal with businesses and professionals alike.
Research by the Office of National Statistics has found that the number of Londoners leaving the city has reached a 10-year high. Their study found that the number of 30 to 40-year-olds leaving the capital last year is more than those arriving and 1 in 5 tech professionals working in the city are either considering or in the process of relocating elsewhere. So what has caused this sudden exodus and where are these professionals going?
Show me the money
Not surprisingly, money has been found to be a major contributing factor as to why many people are choosing to leave the capital. It’s common knowledge that London has a high living cost and this has had a huge impact on the price of housing. In fact, studies have found that the average price of a house in London is £482,000, which is more than double the national average of £223,000. This can leave professionals working in the city in a tough situation.
Living in the centre of London is out of the realms of possibility for many professionals because their wages can’t contend with the price of a mortgage or rent. Even if they can afford somewhere, it’s likely to be far smaller than a property for the same price elsewhere in the country. This leads many to move further out and commute every day, which can be a huge weekly expense depending on how far they have to travel. Add to that the increasing cost of food and entertainment and there’s very little in the pot at the end of the month. While this is a perfect scenario for many, it can be a constant struggle for others.
The fact that so many 30-40-year-olds leaving the city indicates that they have or are beginning to start families and want to buy properties that allow them to cater to their growing brood. In many cases, the only way to do this is by moving out of the city. Others may just want to escape the buzz of city life. The reasons are endless.
However, one thing that cannot be denied is the affordability of other UK cities. In comparison to London, the cost of living in both Manchester and Birmingham is 35% cheaper. With considerably cheaper housing prices and the added bonus of a higher disposable income, living away from London could offer a better quality of life that many are unable to achieve currently.
But what about their careers? Well, thanks to business growth in the economy of other UK cities and the development of the HS2 rail link, there are far more career opportunities for professionals to take advantage of, than there used to be. In an attempt to escape London’s high prices, many businesses are relocating to other areas throughout the UK and offering attractive job roles as they do it, giving professionals a wider scope of jobs to choose from.
For instance, Birmingham has strategically positioned itself as a hub of technological activity at a time when the Internet of Things (IoT), cloud services and data protection start to take over our personal and professional lives. With 3,000 tech businesses based in the city, it’s no wonder that tech professionals are being drawn in, in their droves to grasp these new and in demand opportunities that would have once only been available in London.
Businesses are being enticed by Northern cities
Major businesses across key industries, whose only choice for an HQ would have been London in the past, are now starting to see the benefits of relocating all or parts of their organisation to other areas in the UK. HSBC for example, have already relocated their HQ to Birmingham and moved 1,000 head office roles to the second city in a bid to cut costs and build a closer relationship with their customers.
Deustche Bank have also opened a Birmingham base, which hires 1000 people and services 500 clients and the relocation has enabled them to increase their profits by 150%. As well as banks, Birmingham has also seen their number of tech businesses rise by 38% over the past five years, thanks to its thriving Local Enterprise Partnerships (LEP) and renowned reputation for tech expertise. Security firm, Falanx, and software company, Oxygen Finance are just two of many businesses who have relocated to Birmingham to aid their expansion, after experiencing a lack of specialist tech talent in London.
Manchester, Liverpool, and Leeds have also become popular locations for those businesses who want to move out of London to save money and find new talent. Distrelec, the Swiss electronics and tech distributor and betting company, SportsPesa have respectively chosen Manchester and Liverpool to be the homes of their new European offices, whereas Leeds is now a new base for fashion label, Burberry who have moved 300 employees there in recent times.
Losing vital talent
While these businesses have already found success as a result of their relocations, what effect will this be having on London? We’ve all been made well aware of the talent shortage that’s currently gripping the UK and the negative impact it’s having on many major industries. If the capital continues to lose its talent to other cities, particularly those who work in the tech and digital industries, it’s likely that the businesses that have remained in London will feel the pinch even more.
This mounting pressure has the potential to threaten the growth and development of London-based businesses, as they won’t be able to fill the gaps in their workforce’s knowledge and skillset. This can be exacerbated further if employees leave, due to reaching retirement age or finding better opportunities elsewhere. Attracting and retaining talent from other parts of the country will also be harder, as cities like Manchester are now able to offer attractive roles, with cheaper living and commute costs, that they were unable to before. This understandably can lead to a stunt in business growth and could even lead to closures.
However, while the greener pastures of more northern cities are undeniable and appealing to many, London is still the capital city. There will always be people, either in the UK or the rest of the world who will want to work here, whether it’s for themselves or someone else. In fact, the number of young professionals, aged 18 to 29, moving to the city has remained relatively unchanged for the past five years. This proves that London isn’t past it quite yet.
However, with this increase in competition from other UK cities, the capital will have to step up its game if it wants to continue being the epicentre of UK business.