VOTE OF CONFIDENCE

Tech giants are investing in London just when the big banks are fleeing

Obsession
Brexit
Obsession
Brexit

Facebook just gave London a great big “like.” The firm said today (Nov. 21) that it will add 500 new jobs in the UK in 2017, when its new London headquarters opens—doubling the number of its British employees. The company’s Europe chief, Nicola Mendelsohn, said the UK “remains one of the best places to be a tech company.”

“We came to London in 2007 with just a handful of people, by the end of next year we will have opened a new HQ and plan to employ 1,500 people,” she said (paywall).

It’s not just Facebook that’s showing its commitment to the UK, either. Last week, Google announced plans to hire 3,000 more people in its London base over the next few years.

This eagerness to invest in the British capital contrasts with the post-Brexit nerves felt by banks and financial firms, as they wait to see how their “passporting rights”—which allow financial firms based in Britain to operate in the EU—will be negotiated. Some of the larger US investment banks approached regulators within days (paywall) of the referendum result. According to Anthony Browne, the chief executive of the British Bankers’ Association, the UK’s biggest banks are preparing to relocate in the first few months of 2017. Separately, a survey for KPMG in September found that three quarters of CEOs are considering moving business outside of the UK, and other European cities are wasting no time in trying to lure London firms.

For Michael Jackson, a partner at Mangrove Capital Partners, there’s no reason to abandon Britain. “Tech firms recognize London is a tremendous city with an enormous talent,” he says. He points to London’s “world-class” universities, its ease of access to capital, and the fact that British media and technology thrive together in the city rather than in separate hubs. Other up-and-coming cities “don’t have the whole picture that London has,” he says.

Facebook’s announcement was a “clear vote of confidence” in the UK tech sector, says Russ Shaw, founder of Tech London Advocates. But more assurances are needed. “One priority is access to talent, where the prime minister needs to spell out how she proposes to allow UK firms access to the best international talent while reducing overall immigration.”

As it happens, Theresa May is handing an olive branch to big businesses today. She’s promising an extra £2 billion ($2.4 billion) a year for scientific research and development by 2020, and wants to make Britain’s corporate tax the lowest in the G20.

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