When Jo Hannaford announced that Goldman Sachs was opening an office in the UK’s second largest city, she was puzzled by how many people were asking, “Why Birmingham?”
In a two-year search for a global software development site, Goldman evaluated the merits of many international cities. “Analysis kept bringing us back to Birmingham,” said Hannaford, a Londoner. “It feels like a very safe decision. That makes perfect sense. “
Known for its role in the industrial revolution, the city is emerging as a technology and financial services hub.
It has already attracted bank HSBC’s domestic headquarters and a large Deutsche Bank outpost. But the fact that Goldman, one of the foremost global financial houses, picked it over places like Amsterdam, Frankfurt or Paris, has added to its appeal.
Sandra Wallace, partner at law firm DLA Piper, insisted on staying in Birmingham after her promotion. © Andrew Fox / FT
Sandra Wallace, who jointly heads the European network of Birmingham law firm DLA Piper, believes more banks and tech companies will follow. She insisted on staying in town even if she was promoted to joint British and then joint European managing partner.
“If it’s good enough for Goldman Sachs, it’s good enough for everyone,” she said.
The DLA office, which opened in 1993, currently employs 150 people and is moving to larger premises. DLA just followed its growing customer base. “Our customers were doing more in the West Midlands and it seemed crazy not to follow them,” she said. “There’s so much talent here.”
The population of London is falling for the first time in 30 years and businesses there are having to consider moving to where the workers are after years of moving workers.
Add in ever soaring property prices in the capital and a coronavirus pandemic that has spawned a culture of “work from anywhere,” and it’s no surprise that more graduates are looking for careers in the regional cities where they study . Of the 70,000 people who graduate in the West Midlands each year, 55 percent stay there to work.
Technology company Kainos is another addition to this talent pool. The company arrived in 2019, employs 150 people and is hiring 50 more. This makes it the third largest office for the Belfast-based company in the world. Kainos supports companies like Netflix, HP and Booking.com with digital projects.
Tonya McMorrow, the company’s program and delivery manager in Birmingham, said the city had “met all of our needs”.
The central location and excellent broadband – trials of 5G technology are being conducted – made it perfect for business. “Many of our customers are looking for a team here to work on a project and then they attract people here permanently.”
A new station for the British high-speed line HS2 is being built in Birmingham. © Andrew Fox / FT
Neil Rami, executive director of West Midlands Growth Company, the region’s investment agency, said Goldman’s move had attracted attention, but there had been a quieter, steady exodus from London, with professional service companies clustered around banks. “It’s about companies changing their footprint over time and involving more and more seniors.”
London is 100 minutes away by train – a time that will be cut in half if the high-speed HS2 opens in about a decade.
Office rents are around 60 percent of London levels and wages a third lower. Homes are two thirds of the price.
According to an annual index compiled by the Center for Entrepreneurs’ think tank, more startups are being created in Birmingham than anywhere outside the capital.
Only London can create more startups, according to think tank The Center for Entrepreneurs © Andrew Fox / FT
Billions of pounds of public and private investment have turned a city once dominated by cars and concrete into a modern European hub with canal paths, bike paths, trams and quality office space.
Rami pointed to the size of the West Midlands Combined Authority area run by mayor-elect Andy Street, a former businessman, with an economy of £ 80 billion and a population of £ 2.9 million.
It’s still beating under its weight. A government-commissioned review of the fintech sector by Ron Kalifa found that Birmingham was one of ten UK clusters, but “below potential, with a major upward trend”.
HSBC headquarters in Birmingham © Andrew Fox / FT
But it will take many more Goldmans and HSBCs to overcome the decades of deindustrialization that have drawn the West Midlands and left deep pockets of hardship. Around 14 percent of the workforce have no formal qualifications – twice as many as in London – and almost one in ten is applying for unemployment benefits.
Diane Coyle, professor of public order at Cambridge University, said the UK is unique among major western economies in that it has regional cities that are poorer than the national average.
“There’s no science about when a city starts a virtuous circle with enough good jobs for people to have the skills to fill them, and that’s why new employers keep coming. Is Birmingham at this level? We just have to wait and see. “
According to academic research, Birmingham has one of the youngest and most diverse workforces in the UK. © Andrew Fox / FT
She said it was vital to give Street and other mayors control over 16 year old education and adult skills so they can align them with business needs.
Big Four’s accounting firm PwC hired a record 275 people in the Midlands in 2020 and is paying for some to take a technology degree at the University of Birmingham.
Almost half were from ethnic minorities and two-thirds from non-selective state schools.
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Matthew Hammond, Midlands Leader at PwC, said, “Local leaders must seek to invest in the region’s skill needs to support the next generation in the workforce.”
Hannaford agreed. She said only 10 percent of her Goldman Sachs team from London, around 30 to 50 people, would move. “We want to find new talent locally”. Birmingham would be a “global center of excellence”, not just a back office. She said it could grow out of offices in Warsaw and Stockholm with 500 employees by the end of 2025 when more departments move.
“We were one of the first in Warsaw and now Google, JPMorgan and others are here. Birmingham could be the same. “
