This week, Centre For Cities published a new survey. Entitled ‘The Great British Brain Drain”, the document shows that almost a quarter of British graduates are working in London six months out of university – including 40% of graduates with a Russell Group 1st or 2.1. Talented students are flocking to the capital, at the rest of the UK’s expense.
For small and medium-sized enterprises (SMEs) operating outside London, this news might be unwelcome. In fact, it’s just the latest in a series of studies that name the capital the ‘be-all and end-all’ of British business. And it’s not just students who’ve noticed; according to the 2016 IESE Cities In Motion Index, London tops world rankings for average human capital.
So why exactly is our best talent heading for London over the rest of the UK?
Following Brexit, many onlookers forecast a dip in custom for the UK capital. But, despite warnings, London looks set to weather its economic storms.
Despite suggestions that the EU referendum may ‘pop’ the London property bubble, statistics have yet to suggest significant change in this area. According to ONS, London house prices continued to grow through September. Chinese companies are expected to invest $5bn in London property this year – up a third on 2015.
Besides China, London continues to attract the best of international business. The recent confirmation that Google will establish a mammoth new HQ cements our capital’s position on the global map, as well as creating 3000 new jobs. And London has just overtaken Paris as Europe’s no. 1 retail destination.
All in all, London’s economy continues to equal that of the entirety of Sweden. And that means higher salaries – as well as, admittedly, higher living costs.
Let’s get it started
London’s start-up scene continues to thrive. A recent index launched by Nesta and the European Digital Forum found that our capital topped European cities for start-up-friendliness.
A major contributing factor to this dominance is the city’s digital infrastructure. According to global real estate advisor CBRE, London’s data centre capacity is twice as large as anywhere else in Europe, and experienced the highest demand for colocation datacentre space in 2015.
That’s not the only thing the city’s impressive landscape boosts. Due to several complex factors of which pre-existing infrastructure is one, an hour working in London is 30% more productive than the standard UK worker’s. Plus, thanks to its business saturation and huge working population, London offers opportunities for informal networking – essential for entrepreneurship – that other cities simply can’t compete with.
So start-ups flock to the capital – and so do the students who want to work in these small, dynamic companies.
London’s socio-political culture differs markedly from that of the rest of the UK. It population totals more than Scotland and Wales put together. It generates 22% of the UK’s GDP, although it’s only home to 12.5% of its population. It is richer, bigger, better educated and more liberal than the rest of the country – and like attracts like.
According to a recent PwC/BAV Consulting survey, London tops a poll of preferable places to live. Its progressive, liberal and multicultural standards appeal particularly to students, who value these qualities more than their forebears. Hence the proverbial ‘brain drain’ from the rest of the country.
As for the richness of London’s international scene, the cause is obvious. In 2013, Inner London’s population was 39% foreign-born, compared to the UK’s average of 13.1%. Is it any wonder, then, that our capital attracts the best of foreign talent?
There are issues, of course. The cultural gap results in a marked antipathy between London and the rest of the country, especially in politics. Back in 2015, BBC assistant political editor Norman Smith was called a ‘pillock’ and told to ‘go back to London’ by Salford locals. The feeling’s mutual; post-Brexit, many southerners called for our capital to secede from the UK.
Furthermore, the ‘brain drain’ effect means that, for every top post-graduate attracted to London, another is lost from the so-called provinces. It’s bad for the rest of the country and, of course, bad for business – but complaints aren’t going to stop the grads from coming.
The upshot? There’s a lot going on throughout the UK, business- and culture-wise; nobody sensible would ever suggest otherwise. However, if you’re set on sourcing the best talent for your company, I’m afraid London remains – through Brexit and beyond – your best bet.