Is Deutsche Bank’s decision to move front office trading jobs away from London to Birmingham having the indirect consequence of pushing up cost of living in the city?
It would, of course, be foolhardy to suggest that the creation of 170 front office jobs (alongside up to 2,000 relatively well-paid positions in support functions) is solely responsible for inflating prices across an entire city, even if Birmingham’s burgeoning financial services centre also includes a significant office for Royal Bank of Scotland within the Brindley Place business park. However, cost of living in Birmingham has indeed spiralled over the last 12 months.
The 2014 Cost of Living Survey just released by Mercer puts Birmingham in 90th place – a full 45 places above its 2013 ranking. All UK cities have jumped up the rankings due to the stronger pound, but Birmingham stands out as the big riser, coincidentally or not a year after the relatively high paid bankers have come to town.
According to recruiters, salaries for traders and back office staff in Birmingham are typically 20% lower than those in London, but – in spite of the recent rise in living costs – salaries go much further. London, fuelled by a rapidly escalating property market and the appreciation of the pound against the US dollar, has also shot up the rankings from 25th in 2013 to 12th this year.
Elsewhere, as the table below shows, major financial centres have also been big movers up the rankings. Hong Kong and Singapore remain the most expensive places to work as a banker, with the latter particularly pricy considering its place as a hub for back office work. Zurich and Geneva are also predictably expensive places to live, but New York has also become decidedly pricier, according to Mercer’s rankings, moving from 24th to 16th.
Recent figures from pay benchmarking company Emolument.com suggests that New York is the best place to start you investment banking career, with average compensation packages of £75k for analysts, compared to £55k in London. However, later, it pays to work in the City – average compensation for MDs in London was £610k, it says, compared to £455k in New York.