IInvestment bankers are rarely compared to football stars. But when West Midlands Mayor Andy Street officially welcomed Goldman Sachs to Birmingham this month, he compared his arrival to one of the big transfers of the summer.
âI hope this is not inappropriate,â he said, addressing a crowd of Goldman employees gathered at the city’s newly renovated Grand Hotel. âI think you are probably the moment Cristiano Ronaldo. You are the big one to secure.
The Street team wooed the Wall Street bank for months after hearing in September 2019 that they were looking for their first office outside of London. Two years later, Goldman has hired nearly 100 people in Birmingham – mostly engineers, lawyers, accountants and HR – who will serve as the international headquarters for a new, still-secret “global digital company” to be revealed in early 2023.
A growing number of professional services companies, including banks, are looking out of London as they grow, in part to reduce the costs of labor, property and services which continue to increase in the capital. Birmingham has already succeeded in convincing the quartered consumer bank HSBC, which employs 4,000 people locally, as well as Deutsche Bank, accounting giants KPMG and PwC and BT, which this month said it is expanding its presence in the second largest city in UK with plans to hire 1,000 additional people.
However, although there are 22 universities within an hour’s drive from the city, Birmingham – which is based in an area best known for manufacturing – has struggled with the chicken and egg problem of wanting to retain professional talent, but not having enough lucrative jobs. attract qualified personnel.
The UK’s hyper-centralized economy, focused on London and the South East, has left it behind countries like France, Germany and the US, which have well second-tier cities. established which have helped to compensate for economic imbalances within their borders. This has made it more difficult for places like Birmingham to grow so quickly or attract so many businesses, which might otherwise look to London first, despite Boris Johnson’s ‘upgrade’ program.
While Birmingham has a population of over 1.1 million, the proportion of people working in skilled and professional services – classified as ‘knowledge-intensive business services’ – is around 11%, compared to 24% in London, according to the Center for Cities think tank. On that metric, “Birmingham isn’t really doing very well at this point,” said Kathrin Enenkel, one of the think tank’s lead analysts.
This has made attracting qualified professional service firms a priority for the Mayor of the Midlands. “We have to have these high paying jobs,” Street told The Guardian. And as if to sign a star footballer, it is hoped that Goldman’s arrival could attract other major players to Birmingham.
âWe know that companies, especially those like Goldman Sachs, are clustering together,â said Enenkel. “So it could be that the presence of Goldman Sachs attracts similar companies, and then perhaps Birmingham will become more attractive to graduates who want to settle there.”
This narrative fits perfectly with the government’s “leveling” agenda, with the Prime Minister pledging to raise the level of income in the regions, given the yawning chasm in health, productivity and skills between Greater London and Greater London. other parts of the UK. Although the government has revealed two funding pots, including a Â£ 4.8bn scholarship to support mainstreet regeneration, and is considering establishing a Treasury campus in Darlington, Johnson’s team have yet to reveal a flagship policy to close the gap.
Richard Gnodde, managing director of Goldman’s international operations, said the bank received no incentive from Johnson’s government when it decided on the location of its new business. “It’s our decision, it makes sense to us and it’s very convenient that it relates to what the government is trying to achieve,” Gnodde said.
That didn’t stop the Street team from making their pitch. Street admits that the costs between regional cities are not a strong selling point, given that the variation outside of London is minimal. However, he appears to have sold Gnodde the untapped potential of local engineers and other digital-skilled workers from rival companies and local universities. The city’s airport, along with its proximity to London and the north, is helping, even with the completion of HS2 several years away.
But, like many cities in the UK, the Covid crisis still threatens Birmingham’s economic prospects. The city’s unemployment rate was last recorded at 8%, according to the Office for National Statistics. It is the second highest unemployment rate for a local authority in the UK, behind Barking and Dagenham. Meanwhile, Birmingham has the highest number of people on leave in the country, with 30,400. This record is in part due to its size, but still represents 7% of the local workforce, which is higher. to the UK average of 5%, according to HMRC data.
With the leave set to end this week, Paul Forrest, director of the West Midlands Economic Forum, calls for a commitment to re-qualification to support local workers. “There are a lot of people who are not going to be re-employed in, say, the hospitality sectors, but who are not fully equipped to enter the production sector of the economy,” he said. declared. “So we need to consider serious training programs to compensate for that.”
Street okay. “There could be more money devoted to helping us deal with the whole issue of skills and qualifications, which in fact – I think – is the long term determinant of our level.”
This could prove to be critical, with the mayor saying there is already a ‘big pipeline’ of financial services companies eyeing Birmingham and the wider region for their next location.
However, Street keeps his cards close to his chest. “If a company of Goldman’s caliber has looked at all of the options and approved us, that sends a message to the market on who might as well.”