The professional services sector, including HR, encompasses 4.6 million jobs and adds an estimated £224.8 billion to the UK economy.

According to a new report published by the House of Lords EU Services Sub-Committee, the professional and business services sectors are being “overlooked” in EU-UK trade talks.

Encompassing around four and a half million jobs, this sector includes advertising, legal services, HR, research, accountancy, audit and architecture as well as many more common industries.

The report found that many of the companies within these industries are “small operators” all over the UK, with two-thirds located outside London and the south-east. Due to this, the report warns that the “future EU-UK arrangements on trade in services will have a big impact on this sector, particularly small operators”.

The Committee’s Chair Baroness Donaghy, commented on the findings of this report:

Professional business services are a vital part of the UK’s economy, more than four and a half million jobs depend on this sector and it contributes almost £225 billion to our economy.

This sector, and the people who depend on it for their livelihoods, will suffer if its needs are not reflected in the UK’s negotiations with the EU. We are concerned that they have been overlooked in the negotiations so far.

A free trade agreement on services is no silver bullet, but there are a number of areas that both sides need to get right to limit potential barriers to trade. It is essential that issues such as EU Member State national reservations to the agreement, the mutual recognition of professional qualifications and business mobility are dealt with properly in a future UK-EU agreement. These barriers to trade must be prevented.

Despite being so close to the end of the transition period, many businesses, especially SMEs, are not well prepared, not least because they are not sure what to prepare for.

The report found that 13 per cent of the UK’s workforce were hired under the professional and business services sector and the EU is their largest market, accounting for 37 per cent of the UK’s professional and business services exports.

Furthermore, the report also highlighted the reliance on travel between EU countries and the UK in order to sustain these sectors. Therefore, the Committee has called on the Government to establish a temporary business mobility agreement with the EU. The Committee specifically urged the Government to comprehensively decide and outline the “arrangements on the duration and nature of permitted business travel”.

It also raised the issues of deciding an agreement that would “protect the UK’s intellectual property framework” and also asked for the Government to push for assessments regarding financial services equivalence and audit adequacy, stating its “alarm over the lack of an EU decision” on this matter.

Neil Carberry, Chief Executive of the Recruitment and Employment Confederation (REC), said:

Whilst the COVID-19 crisis has left our members little bandwidth for other matters, we are pleased the Lords committee has listened to our concerns on the potential impact on the recruitment industry of not getting trade deals right.

Mr. Carberry called on the Government to reduce unnecessary trade barriers, uphold professional qualifications, ensure mobility for UK professionals to travel within the EU and to ensure data flows easily between the UK and the EU.

Mr. Carberry continued, saying:

Our members urgently need clarity on how to run their businesses post Brexit so they have time to prepare and innovate. The Government should take this report seriously and act quickly to create the right conditions for our collective economic recovery.