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Migration Advisory Committee review identifies British need for foreign tradesmen after Brexit

EU Reporter Correspondent

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British firms will need to employ foreign tradesmen such as electricians, bricklayers and butchers after Brexit because of shortages. The country will also be reliant on migrant car mechanics, physiotherapists, and foreign language teachers. These occupations, along with others such as lab technicians, pharmacists and meat hygiene inspectors, are set to be included in a list of jobs that qualify for work visa eligibility.

They are identified in a review by the Migration Advisory Committee (MAC) published today (29 September). The review recommends that the occupations should be added to the official Home Office Shortage Occupations List (SOL) to make it easier for migrants to apply for work visas to fill vacancies.

The existing SOL also includes engineers, programmers, web designers, medical practitioners, artists, dancers and nurses. The MAC review predicts that when free movement of people ends after Brexit on 1 January 2021, several sectors within the economy will face manpower pressures. It particularly highlights shortages in the care sector and recommends numerous care sector jobs be added to the SOL, including senior care workers, residential, day and domiciliary care managers and proprietors.

The review warns that low wages in social care mean most frontline occupations in the sector are ineligible for the skilled worker route. It calls on the sector to make jobs more attractive to UK workers by increasing salaries rather than relying on migrants, particularly during the ongoing COVID-19 pandemic. Care sector stakeholders have predicted staff shortages will put huge strain on both health and social care as the British population ages.

One projection is that the 65 and over age group will increase from 10.2 million in 2018 to 14.1 million by 2035, requiring a further 580,000 jobs. Another predicts that the 75 and over demographic is set to grow by 50 percent and would require a further 800,000 jobs.

Immigration specialist Yash Dubal, director of A Y & J Solicitors, is calling for the MAC to recommend reclassifying care workers and home carers as medium skilled workers, a move that will allow care homes to fill vacancies with overseas workers. He said: “It would be greatly welcomed if the Government, with a recommendation from the MAC, was to reclassify care workers and home carers up from the lower-skilled classification they currently hold. They could then be added to the SOL and foreign workers could be sponsored at a lower salary of £20,480, rather than the minimum £25,600 needed under the new points-based system. This would then become affordable for the care industry which could remain competitive and continue providing care for those who need it the most and who get little government support.

“If the current system remains, the care sector is in danger of collapse due to rising costs and lack of the right staff. In April last year one of Britain's largest care home groups, Four Seasons Health Care, went into administration and we could see more.”

Dubal also believes the numbers of migrants needed in the UK could increase after Brexit. He explained: “This report shows that there continues to be shortages of skilled workers in around 70 professions in the UK, with more being added. Only a few have been removed so the trend is towards a skills shortage, not surplus. In order to keep the economy strong and globally competitive, those workers have to come from somewhere, and if they are not in the UK, they will come from overseas.

“At A Y & J Solicitors, we have actually seen a rise in the number of skilled workers from overseas applying for UK work visas, not a reduction, and I expect that trend to continue.

“Unfortunately, there will be a lot of job losses due to coronavirus and its effects, but these will be concentrated in the retail, leisure, travel and hospitality sectors, not those on the SOL. People may retrain of course, but in the interim employers will look internationally to fill their vacancies.”

Occupations on the SOL are subject to different, more favourable, migration arrangements, enabling employers to access a wider pool of suitable workers, more quickly. Candidates from overseas applying for jobs in these fields are eligible for work visas under the skilled worker route.

The MAC provides independent, evidence-based advice on migration issues to the Government, and was commissioned to consider what medium-skill occupations should be included ahead of the introduction of a points-based immigration system on 1 January 2021. The review also recommends that several agri-food sector occupations be added to a Northern Ireland-only SOL, as after Brexit, firms in Northern Ireland will face competition from those across the border in Ireland which will retain access to unrestricted labour from the EU.

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UK will resist 'dubious' EU pressure on banks, says BoE's Bailey

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Britain will resist “very firmly” any European Union attempts to arm-twist banks into shifting trillions of euros in derivatives clearing from Britain to the bloc after Brexit, Bank of England Governor Andrew Bailey said on Wednesday, write Huw Jones and David Milliken.

Europe’s top banks have been asked by the European Commission to justify why they should not have to shift clearing of euro-denominated derivatives from London to the EU, a document seen by Reuters on Tuesday showed.

Britain’s financial services industry, which contributes over 10% of the country’s taxes, has been largely cut off from the EU since a Brexit transition period ended on Dec. 31 as the sector is not covered by the UK-EU trade deal.

Trading in EU shares and derivatives has already left Britain for the continent.

The EU is now targeting clearing which is dominated by the London Stock Exchange’s LCH arm to reduce the bloc’s reliance on the City of London financial hub, over which EU rules and supervision no longer apply.

“It would be very controversial in my view, because legislating extra-territorially is controversial anyway and obviously of dubious legality, frankly, ...” Bailey told lawmakers in Britain’s parliament on Wednesday.

The European Commission said it had no comment at this stage.

Some 75% of the 83.5 trillion euros ($101 trillion) in clearing positions at LCH are not held by EU counterparties and the EU should not be targeting them, Bailey said.

Clearing is a core part of financial plumbing, ensuring that a stock or bond trade is completed, even if one side of the transaction goes bust.

“I have to say to you quite bluntly that that would be highly controversial and I have to say that that would be something that we would, I think, have to and want to resist very firmly,” he said.

Asked by a lawmaker if he understood concerns among EU policymakers about companies having to go outside the bloc for financial services, Bailey said: “The answer to that is competition not protectionism.”

Brussels has given LCH permission, known as equivalence, to continue clearing euro trades for EU firms until mid-2022, providing time for banks to shift positions from London to the bloc.

The question of equivalence is not about mandating what non-EU market participants must do outside the bloc and the latest efforts by Brussels were about forced relocation of financial activity, Bailey said.

Deutsche Boerse has been offering sweeteners to banks that shift positions from London to its Eurex clearing arm in Frankfurt, but has barely eroded LCH’s market share.

The volume of clearing represented by EU clients at LCH in London would not be very viable on its own inside the bloc as it would mean fragmenting a big pool of derivatives, Bailey said.

“By splitting that pool up the whole process becomes less efficient. To break that down it would increase costs, no question about that,” he said.

Banks have said that by clearing all denominations of derivatives at LCH means they can net across different positions to save on margin, or cash they must post against potential default of trades.

($1 = €0.8253 )

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Britain agrees to EU request for more time to ratify Brexit trade deal

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Britain has agreed to the European Union’s request to delay ratification of their post-Brexit trade agreement until 30 April, cabinet office minister Michael Gove (pictured) said on Tuesday (23 February), writes Elizabeth Piper.

Earlier this month, the EU asked Britain if it could take extra time to ratify the agreement by extending until 30 April provisional application of the deal to ensure it was in all 24 of the bloc’s languages for parliamentary scrutiny.

In a letter to Maros Sefcovic, vice president of the European Commission, Gove wrote: “I can confirm that the United Kingdom is content to agree that the date on which provisional application shall cease to apply ... should be extended to 30 April 2021.”

He also said Britain expected there to be no more delays.

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How Amsterdam is stealing a march on rivals as Brexit trading hub

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All the talk was of Frankfurt or Paris luring London’s financial business as Britain peeled away from the EU. Yet it is Amsterdam that is proving the most visible early winner. Data last week showed the Dutch capital had displaced London as Europe’s biggest share trading centre in January, grabbing a fifth of the 40 billion euros-a-day action, up from below a tenth of trading pre-Brexit, write Tommy Wilkes, Toby Sterling, Abhinav Ramnarayan and Huw Jones.

Yet that is just one of several areas the city has quietly stolen a march on its rivals as it attracts businesses from Britain, evoking memories of its history as a global trading powerhouse in the 17th century.

Amsterdam has also overtaken London to become Europe’s number one corporate listing venue so far this year, data shows, and the leader in euro-denominated interest-rate swaps, a market estimated to be worth about $135 trillion in 2020.

“There is a whole culture of trading, and to be close to that was very positive,” said Robert Barnes, CEO of London Stock Exchange-owned share trading platform Turquoise, which has selected the Dutch capital over Paris for its post-Brexit hub.

“You have some of the big institutional banks, you have specialist trading firms, a dynamic retail community. But it’s also in the heart of continental Europe.”

Cboe Europe, an equities exchange, told Reuters it was launching an equities derivatives venture in Amsterdam in the coming weeks to emulate the trading model built in its Chicago home.

Asked why Cboe chose Amsterdam over rivals, Howson said the Netherlands was where he saw “substantive growth” for his industry in Europe. He also cited the wide use of English in the city and Dutch regulation being friendly to global investors, in contrast to some European countries’ preference for championing domestically-focused firms.

“You need core Europe to be competitive on a global scale,” said Howson. “A more insular Europe or too much national interest makes that a difficult thing.”

Yet while the arrival of such businesses may bring higher tax revenues from trading volumes and private investment in infrastructure, the city is not experiencing a jobs boom, as many companies relocating there tend to be highly specialised, and smaller employers.

Turquoise’s new Amsterdam operation, for instance, sits in the former head office of the Dutch East India Company, the trading megacorporation that fuelled Amsterdam’s rise to its former finance fame - yet it only employs four staff.

The Netherlands Foreign Investment Agency, which has led the effort to woo Brexit business, told Reuters it estimated about 1,000 new jobs had been created by financial firms moving operations to Amsterdam since Britain left the EU.

That’s a fraction of the 7,500 to 10,000 jobs estimated to have left London for the EU since 2016, when Britain voted the leave the bloc, and a drop in the ocean compared with the British capital’s financial workforce, which numbers over half a million.

Many investment banks with their large staffs have looked elsewhere on the continent, deterred in part by Dutch laws that limit banker bonuses.

Amsterdam leads the European listings table this year, having attracted $3.4 billion-worth of initial public offerings (IPOs), Refinitiv data shows. That included Poland’s InPost, which raised 2.8 billion euros in the biggest European IPO in 2021 so far.

Spanish fintech form Allfunds, Dutch web startup WeTransfer and two “blank-cheque” firms - one backed by ex-Commerzbank chief executive Martin Blessing and another by French tycoon Bernard Arnault - are planning to list on Euronext Amsterdam.

At least three technology companies from Central and East European are also considering listings as Brexit dents London’s allure, bankers told Reuters.

Banking sources working on the two blank-cheque, or special purpose acquisition companies (SPACs), said Dutch regulations were closest to rules in the United States, making it easier to appeal globally.

In the euro-denominated interest rate swaps market, platforms in Amsterdam and New York have grabbed the bulk of business lost by London, whose share fell from just under 40% in July to just over 10% in January, IHS Markit data shows.

That made the Dutch capital the biggest player, an advance from last July when platforms in the city commanded just 10% of the market.

Amsterdam will also become home to the European carbon emissions trading, worth a billion euros a day in trading volumes, when the Intercontinental Exchange (ICE) moves the market from London later this year.

The Netherlands Foreign Investment Agency, which began analysing where Amsterdam could capitalise after Britain’s 2016 decision to leave the EU, said it had identified certain financial sectors where it believed it could have an edge.

“We focused on specialist areas ... that were trading and fintech,” said spokesman Michiel Bakhuizen, adding that the city played up the strength of its low-latency digital trading infrastructure.

“The big investment banks were always going to move to Frankfurt and Paris because of the Dutch legislation that is in place for bank bonuses,” he added, referring to a 2015 law limiting variable pay to a maximum of 20% of base salary.

This drive to focus on specialist areas rather than appeal more broadly could be reflected in the number of companies relocating.

In response to Brexit, 47 firms have shifted operations entirely or partly to Amsterdam from London, according to preliminary data compiled by New Financial, a think-tank.

That is lower than the 88 firms that have moved business to Paris and the 56 to Frankfurt.

Companies to have shifted operations to the Netherlands include CME, MarketAxess and Tradeweb. A handful of asset managers and banks including Commonwealth Bank of Australia are also relocating there.

By contrast, those firms that have moved departments and staff to Frankfurt have mainly been big investment banks, including JP Morgan, Citi and Morgan Stanley, while Paris has mostly welcomed banks and asset managers, according to New Financial.

William Wright, New Financial’s managing director, notes that although fewer firms have made the move to Amsterdam, the city’s share “is highly concentrated by sector, with Amsterdam having a clear lead in areas like broking, trading, exchanges and fintech”.

Amsterdam’s apparent success, however, may be flattered because Brexit has so far hit trading hardest, and such business may be easier to move.

“The early data on the impact of Brexit is mainly trading-based, hence Amsterdam looks like it is doing particularly well,” Wright added. “And I’m not making a call on Amsterdam for IPOs yet as I think it’s way too early.”

Sander van Leijenhorst, Brexit programme manager at the AFM Dutch financial regulator, said authorities would actually have preferred London retaining its dominance because of the efficiencies that come from concentrating everything in a single European hub, he said.

But once the implications of Brexit became clearer, it was obvious that Amsterdam - home to the world’s oldest stock exchange - would appeal, he added.

“There was already a group of traders here. They tend to come together, they tend to flock together.”

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