LEEDS is a preferred location for financial services companies as they look to repatriate functions from emerging market economies or move them from London, according to a new report.
Although the overriding trend for companies setting up operations such as call centres abroad remains, in recent years many financial companies have started to prefer near-shoring, whereby their operations are established closer to home, says the report from financial services’ promotion body TheCityUK.
Chris Cummings, chief executive of TheCityUK, said: “Our report investigated 147 location decisions made by financial services companies. What emerged is a trend to locate, and often repatriate, core business functions to the UK’s regions – creating and expanding significant service hubs for global organisations.
“DLA Piper is a great example of this phenomenon. The world’s largest law firm operates its global IT hub from Leeds, providing full IT support to their 40 offices across the UK, Europe, the Middle East and Asia.
“In a fiercely competitive market to attract such companies is clearly a boon for job creation and the prospects of the local economy. I believe that this trend is set to grow.”
According to TheCityUK, the financial and professional services sector currently accounts for 13.5 per cent of UK GDP. The sector employs over two million people, more than 68 per cent of whom work outside London.
The Leeds city region employs about 40,500 in financial and professional services, comprising almost one in 10 jobs in the area. It is estimated that the sector in the Leeds city region contributes £7.3bn of gross value added (GVA) to the UK economy. Outside London, that is the greatest economic contribution from financial and professional services in a region, beating Greater Manchester’s £6.4bn, Greater Birmingham’s £4.5bn and Sheffield’s £2.4bn.
The sector makes up about 20 per cent of Leeds city’s GVA at £3,564m. Major financial and professional services firms in the Leeds area include Direct Line, Aviva, Yorkshire Bank and Eversheds.
Mr Cummings, who was born in Wakefield and grew up in Leeds, added: “As wage differentials between the UK and Asia reduce and areas such as Leeds continue to provide skilled pools of flexible workers, near shoring will grow and Leeds will benefit.
“Furthermore, with regulatory change putting pressure on the profit margins of financial services companies, I think areas such as Leeds will increasingly be seen as alternatives to London and other financial centres for companies setting up significant financial services operations.”