The UK's decision to leave the European Union (EU) has resulted in uncertainty for both graduate employment and the higher education sector. Here we outline the potential effects of Brexit…
How will Brexit affect the graduate labour market?
Graduate recruitment slowed significantly before the EU referendum in June, and the current uncertainty is expected to continue for some time. Even if the UK doesn't enter recession this year, the graduate jobs market will probably act as if it has.
However, the UK economy remains large and relatively strong, and the country's attractiveness as a place to work will ensure that it remains a major graduate employer. In addition, the number of 21-year-olds is projected to fall from 845,000 in 2015 to 742,000 in 2023 - and is not projected to return to last year's levels until 2028. This means that the economic effects of Brexit are likely to be softened by a fall in the number of UK graduates; however, uplift in university participation is necessary to avoid any negative effect on skills demand.
How will Brexit affect 2016 and 2017 graduates?
This year's graduates will enter a jobs market that's more challenging than they might've previously expected - indeed, early unemployment is likely to rise slightly and the proportion of graduates entering non-graduate jobs is also likely to increase.
However, most 2016 graduates will still get jobs - and the majority of these will be in professional-level employment.
Next year's graduates might be more seriously affected than this year's cohort. This is because Article 50 - which formally signals the UK's intention to withdraw from the EU - is likely to be triggered in 2017. When this occurs, business confidence, investment and hiring plans are likely to be affected.
All students should visit their university's careers and employability service for advice and support during this uncertain period, and check out our advice on getting a job, CVs and cover letters, applying for jobs and interview tips.
How will Brexit affect potential students, both domestic and overseas?
Using the evidence from previous recessions, any economic downturn will likely cause greater demand for postgraduate study among UK students.
However, it is overseas students - particularly those from within the EU - that will be affected most by Brexit. The Home Office may change the rules governing how overseas students study in the UK; EU students, for example, will probably no longer qualify for reduced fees. Brexit will therefore almost certainly result in a reduced number of international students, though it's important to remember that overseas students will always be welcomed into the UK's higher education system.
Which job sectors will be affected most by Brexit?
Job sectors that are likely to be affected negatively by Brexit include:
- Accountancy, banking and finance; and business, consulting and management - In the short to medium term, graduates should expect a fall in available jobs. London is still, however, expected to remain a global financial hub that employs many more people than will leave.
- Energy and utilities - There will be some impact due to the degree of engagement of the energy sector with Europe. What's more, while the factors affecting the oil and gas industry are largely independent of the EU, the sector may be impacted later by the long-term economic effects of Brexit.
- Law - While the lengthy process of withdrawal from the EU and recasting of laws will require skilled UK lawyers, many of the larger firms get significant revenue from the City and anticipate a reduction in overall hiring.
- Media and internet; marketing, advertising and PR; and retail - These are likely to be impacted by overall economic health, business and consumer spending, and all expect reduced hiring as a consequence.
Job sectors that are likely to be affected positively by Brexit - or not affected at all - include:
- Engineering and manufacturing; and property and construction - UK graduates will remain welcome in engineering and construction, and there may be options worth examining for graduates with the right skillsets.
- Healthcare - It is politically difficult to reduce National Health Service (NHS) spend under current circumstances, meaning that this sector is likely to see at least steady graduate recruitment.
- Leisure and tourism - This is one sector that is largely optimistic. A falling pound makes the UK a more attractive tourist destination, while the sector also expects increased demands from the UK population for domestic holidays. Despite this, hotels catering for business travellers expect a downturn, and flights out of the UK may become more expensive as EU regulations have allowed a single market in aviation services that the UK may have to renegotiate to enter.
- Public services and administration - At present, Brexit doesn't appear likely to have a significant impact on jobs in the civil service and may even slightly increase available positions.
- Teaching and education - Many areas of teaching, especially in the sciences and technology, are in need of more graduates. There is unlikely to be a reduction in opportunities for this year's cohort.