The London Problem Has Morphed
In 2019, we worried about talent leaving the West Midlands for London. In 2026, the challenge is more subtle, and in some ways more difficult to solve.
Hilary Smyth-Allen · CEO, SuperTech WM
For the better part of a decade, the West Midlands’ professional and financial services sector has understood its relationship with London through a reasonably familiar frame: the capital attracts talent, exerts gravitational pull on ambitious graduates and experienced professionals alike, and leaves regional firms competing for a narrower pool than their growth ambitions would warrant. That framing shaped the evidence base developed in 2019 in which London dependency, especially for technology skills, was identified as a structural fragility, expensive and difficult to resolve.
What has become clear through our continuing work to update that evidence base, including through a senior leaders’ roundtable convened in Birmingham in June 2026, is that the dependency has not gone away. It has, however, morphed in ways that existing policy responses are not fully equipped to address. Two shifts are worth examining carefully.
Economic capture without physical migration
Hybrid working that followed from COVID-19 has, on one reading, been positive for the West Midlands. Work that was previously assumed to require London proximity has migrated northward. Senior professionals who might once have felt compelled to relocate are choosing to remain in the region, raising families in Solihull or Warwick while serving clients in the City. PLC audit work, complex international mandates, high-value legal instructions; all of these are increasingly being delivered from Birmingham. In part because clients have grown comfortable with the idea that quality professional services do not require a London postcode, or because the exact geographical location of work execution is blurred through national reach of firms.
But this real and meaningful shift sits alongside a development that is less comfortable: the same hybrid infrastructure that enables regional professionals to serve London clients is equally available to London firms seeking to access regional talent. A skilled lawyer or accountant living in the West Midlands can now be employed by a London firm, working predominantly from home, on a salary structure that reflects London market rates, without ever needing to relocate, and without their economic contribution registering in any meaningful way within the regional ecosystem....at least not in the way that economists think about business footprints and economic contribution of firms.
The risk is not that people are leaving for London. It is that they are staying here while being economically somewhere else entirely.
This is a categorically different problem from the one we identified in 2019 when examining business footprints, how/ where value is captured and productivity measures for the services sector. Then, the concern was physical: employees and skills moving out of the region. Now, the concern is economic: people remaining in the region geographically while their productivity, professional networks, career development, and their professional activity become oriented around a firm and a city elsewhere. Birmingham and the West Midlands still benefit from these individuals living locally. Their spending, taxation, and participation in local communities continue to support the region. However, a smaller proportion of the economic value generated through their work circulates through local firms, supply chains, and professional networks. The region retains the population, but captures less of the multiplier effect that comes from professionals being embedded in local businesses, building local client relationships, and eventually recycling their expertise, influence, and earnings back into the regional economy.
This matters for how we think about place. The recent roundtable discussion surfaced a telling observation: there is less demand among many of the most ambitious and talented professionals in the region for sector events, regional networking, and broader participation in the civic and commercial life of Birmingham and the West Midlands. This is not because they have no interest in doing so. Rather, those activities increasingly sit outside the rhythms of their working lives, particularly when their required office presence, career progression, and day-to-day professional relationships are centred elsewhere. As a result, their sense of professional community is increasingly shaped by organisations and networks beyond the region.
The risk is not that local engagement disappears entirely, but that it becomes progressively thinner. The informal infrastructure that underpins a strong professional services ecosystem, including relationships, referrals, mentorship, collaboration, and shared intelligence about where markets are moving, may be gradually weakening. This is the kind of change that is unlikely to appear in headline employment statistics. The people remain, and some economic benefits remain with them, but a growing share of the professional and commercial activity that drives long-term regional dynamism may be taking place elsewhere.
2 From London talent dependency to US data dependency
The second shift is newer, less discussed, and in some respects more structurally significant. In 2019, the dependency on London was primarily a talent dependency: the technology and data skills that financial and professional services firms needed were not being produced regionally at the required scale or specialism, and firms were sourcing them from the capital at considerable cost. Remember, this was a time when the term ‘engineering’ was only just starting to appear in the services domain compared to now with the HQ for Goldman Sachs’ engineering division anchored in the city region. It’s easy to forget how recent tech meant the IT department and firm operations. The policy response: invest in skills pipelines, develop regional talent, and make the West Midlands a more compelling destination for tech professionals, was logical then and remains relevant now.
Again, the recent roundtable surfaced, a further dependency at the data and infrastructure level. As firms across the sector adopt AI tools at pace - the adoption curve in West Midlands professional and financial services is steeper than is perhaps widely appreciated -the overwhelming majority of that adoption is channelled through platforms headquartered and governed in the United States. The proprietary operational data of regional firms: customer behaviour, risk models, transaction patterns, legal precedents, financial records, is being processed through systems over which neither the firms nor the region retain meaningful sovereignty.
This is not, it should be said, a uniquely regional problem. It is a national one, and in some respects a European one. Nor is it a reason to resist AI adoption — the productivity and capability case for these tools is real, and firms that decline to engage with them on principle will find themselves at a competitive disadvantage that will not be compensated by data sovereignty. But the regional dimension is worth noting, precisely because the West Midlands’ professional and financial services sector has a particular exposure.
Just as technology skills were sourced from London rather than grown regionally, AI capability is increasingly being sourced from San Francisco rather than built domestically.
Financial services, legal, and insurance firms, which together represent a substantial proportion of the sector’s output in this region, handle some of the most sensitive and commercially valuable data in the economy. The competitive advantage of a law firm, an accountancy practice, or a financial services provider is substantially constituted by the depth and quality of the knowledge embedded in its historical records: the pattern of client behaviour, the accumulated body of case outcomes, the proprietary analytical frameworks developed over years of practice. When that knowledge is processed through externally governed AI systems, the question of who retains ownership of the insights it generates is not straightforward, and it is not a question that most regional firms are yet asking with any systematic rigour.
The counterargument to this is that the direction of travel in the open-source AI ecosystem is toward smaller, more specialised models that can be hosted locally, on private infrastructure, within a firm’s own environment, without routing data through external platforms. If that trajectory continues and costs fall as anticipated, the sovereignty concern may prove partially self-resolving at the firm level, at least for those organisations with the technical capacity and strategic foresight to make deliberate infrastructure choices. But that is a significant qualification: the default, for most firms, is to reach for the available tool, and the available tools are, overwhelmingly, American.
What this means for regional policy and sector strategy
Neither of these shifts are straightforwardly addressable through the mechanisms that regional policy currently has at its disposal. The economic capture problem is, in part, a consequence of decisions made by large national and global firms about how they structure their workforces: decisions that are rational at the firm level and very difficult to influence from outside. The data sovereignty problem is, in part, a consequence of the global structure of the AI industry, which no UK city-region can reshape unilaterally.
But “difficult to address” is not the same as “not worth addressing”, and there are more bounded interventions that are worth considering. On the economic capture question, the focus needs to shift from residential talent retention to professional embeddedness in a civic and commercial sense. The question is not whether people are living in the West Midlands, but whether they are participating in it: building relationships within the regional ecosystem, contributing to the sector networks and knowledge commons that make a place genuinely competitive, and eventually recycling their experience and capital back into regional firms and ventures.
On the data sovereignty question, the most productive near-term contribution that regional actors can make is probably to ensure that the issue is on the agenda in boardrooms and in sector forums, and that those conversations feed upward into national industrial strategy. The West Midlands’ professional and financial services sector is not going to build its own large language models. But it can make deliberate choices about data governance, about the terms on which it engages with AI platforms, and about the extent to which it invests in building proprietary analytical capability that does not depend on external infrastructure. Those choices do require visibility to the problem.
Identifying the problem clearly and grounding it in the lived experience of regional firms, is itself a contribution to solving it.
This is part of what the updated Next Generation Services evidence base, being developed in partnership with City-REDI at the University of Birmingham and the West Midlands Combined Authority, is intended to do. The 2019 research gave the sector a language for talking about its structural challenges. The work now underway is attempting to update that language for a world that has changed in ways that were not fully foreseeable seven years ago, a world in which the dependencies that constrain regional growth are no longer primarily about where people choose to live, but about where data flows, where value is captured, and where the decisions that shape the sector are ultimately made.
The London challenge has not gone away. It has simply become harder to see.
Hilary Smyth-Allen is CEO of SuperTech WM, the West Midlands’ cluster body for financial and professional services technology and is a partner of CIty-REDI, co-producing the evidence base for the region’s Next Generation Services cluster sector. This piece draws on discussions from a Senior Leaders’ Roundtable held in Birmingham on 12 June 2026.