Around 90,000 white-collar jobs in London could move to other parts of the UK over the next five years as businesses seek to cut costs and the government pushes for greater economic decentralisation.
An analysis by recruitment firm Robert Walters, shared with Bloomberg, estimates that the relocation of these jobs could shift as much as £9 billion ($12.1 billion) in employer spending to regional centres such as Manchester, Leeds and Birmingham.
When the wider economic impact on commercial property and local businesses is taken into account, the total value of spending redirected away from London could reach £15 billion, according to the analysis.
Although the 90,000 jobs represent only a small share of London’s overall workforce, the expected shift is being seen as part of a broader restructuring of the UK economy and a move towards stronger regional employment markets.
Jonny Bohane, senior market research manager at Robert Walters, said the figures pointed to a “rebalancing towards stronger growth in regional employment.”
Manchester set to be biggest beneficiary
Manchester and the wider North West are expected to benefit most from the trend, attracting around 22,500 positions — roughly a quarter of the total number of jobs forecast to move out of London.
The Midlands is expected to account for about 20% of the relocated jobs, while Yorkshire could attract a further 15%. The remainder is expected to be spread across other parts of the UK.
The shift comes as Prime Minister Andy Burnham pushes ahead with plans to decentralise economic decision-making and give regional authorities greater control over locally raised revenues.
UK remains highly centralised
The UK is the most fiscally centralised country among the OECD’s 38 members, with only about 5% of tax revenue and 20% of spending decisions controlled at the local level.
Burnham’s decentralisation agenda aims to give regional governments greater powers and allow them to retain more control over the revenues generated in their areas.
However, the movement of businesses and jobs away from London predates the current government initiative.
Major banks and professional services firms, including Deloitte and Goldman Sachs, have established regional operations in cities such as Birmingham and Manchester. The Bank of England also plans to have around 10% of its workforce based in Leeds by next year.
Daniel Harris, UK and Ireland chief executive of Robert Walters, said the trend was likely to accelerate as companies continued to face high operating costs while hybrid working made it easier to build geographically dispersed teams.
“Cost pressures remain high, while hybrid working is enabling organisations to build more geographically diverse teams,” Harris said.
He added that many UK companies continued to keep senior management in London while increasingly relying on local recruitment for lower-level positions.
Regional employment growing faster
Separate data from human resources platform Employment Hero also points to faster employment growth outside the capital.
Employment in northern England rose 6.3% in July from the previous quarter, around twice the pace recorded in London.
The figures suggest that London’s long-standing dominance as the UK’s primary business hub may be gradually giving way to a more geographically distributed employment market, as companies balance the benefits of access to the capital against higher costs and the flexibility offered by hybrid working.
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