Are you thinking of investing in London, or are just looking for a job there? The city is currently in a state of flux, with some traditionally strong business sectors struggling while others enjoy an unusual degree of success. Take a look at our profiles of the best and worst-performing to see what might be right for you.
If there’s one sector that regulation is good for, it’s tech. GDPR has created hundreds of new jobs for coders and web designers, while the increased responsibility firms are being expected to take for data more widely has led them to invest more heavily in cybersecurity experts. Furthermore, the very real risk of cyberattacks by terrorists or foreign powers – not to mention competitors – has made companies aware that they need to change the way they think about protecting their systems and training their staff. All this has proved a real boon for a sector which had been facing concerns as fintech took a downturn. In fact, the tech sector could even benefit from a messy Brexit because of the way that would require established processes to be changed, especially where EU-led approaches were replaced by new UK regulation.
That there would be growth in the healthcare sector at around this time is something that could be predicted 40 years ago – it’s a simple consequence of an ageing population. In London it has manifested in growth in both the public and private sectors, across clinical work, research and the provision of practical support such as at-home care. Because it’s rooted in a demand for essentials it’s likely to be resilient even in the face of wider economic difficulties. Furthermore, new opportunities are emerging as a result of the shift from focusing on cures to developing new preventative treatments and support for healthier lifestyles. The main concern in the sector at present is recruitment, which makes it a promising option for suitably qualified people seeking work in the city.
Design and creative industries
Often written off as a minor player in the UK’s economy (despite the enthusiasm of former chancellor George Osborne), the creative industries have been growing steadily over the past year, with employment increasing at double the rate of other sectors. Game development and work in the ecommerce and advertising sectors is proving particularly effective at generating revenue. The recent announcement of a new investment initiative from the Cultural Development Fund, which will see £250m pumped into these industries over the next five years, has further increased confidence and helped make this one time minor player a significant economic driver as it begins to reach into overseas markets increasingly effectively.
A year ago, fintech was London’s strongest sector. Today, in the chaotic new world created by the prospect of a no-deal Brexit, it risks becoming one of its weakest. Financial services more generally have experienced a significant downturn, with only 5% of firms saying that they retain confidence in the sector. The fall in profits over the last quarter was the worst for a decade, while revenues have also dropped and economists across the globe have begun to express serious concern. A significant number of major finance companies have actually left to set up in countries they consider more secure, while others are securing their equipment in storage facilities and going into hibernation. Can this be turned around? That will depend on the government as much as on business.
Despite an acknowledged need for more house-building and redevelopment of brownfield sites in London, and promises of major investment in infrastructure, the construction industry has suffered a major downturn in the past few months. This has had effects right across the country but has been felt particularly severely in London because of the number of major construction companies and supporting businesses – architects, engineers and so forth – headquartered here. Concern about Brexit is probably a major factor as construction depends heavily on imported materials and migrant labour is used to manage fluctuating demand. June this year was the sector’s worst month since the last recession.
Looking at these different sectors, it’s clear that the structure of London’s economy is changing. What will happen next is difficult to predict because there’s so much uncertainty about the long-term future of the UK’s trading relationships. What is understood, however, is that sectors able to grow during a difficult time like this generally have a strong long-term future, so are well worth your attention.