City of London "Sending out SOS Signals" - 49% Decrease in Professionals Seeking Jobs, Year-on-Year say Morgan McKinley

Concerns over how long the City of London can weather Brexit uncertainty were raised today when one of the leading recruiters for the finance sector conformed a 13% drop in job availability year-on-year.

Research out on October 16 shows the City - the colloquial term for London’s financial services sector - has suffered a notable 49% decrease in professionals seeking jobs, year-on-year and a 13% drop in job availabilty over the same period.

According to the latest Morgan McKinley London Employment Monitor, the autumn season did however commence with a positive – though light – increase in jobs available.

“It’s encouraging that Brexit hasn’t upturned the normal seasonal business cycle,” says Hakan Enver, Operations Director, Morgan McKinley Financial Services, describing the 6% month-on-month increase.

However, year-on-year jobs data paint a more concerning portrait of the jobs landscape.

Although 2017 figures have flatlined since April, the 13% year-on-year decline indicates a more stubborn stasis.

“Whilst it’s fair to say that the City will never return to hiring levels seen pre-2007, Brexit has further hampered any form of real recovery, with businesses stuck in limbo, unable to commit to creating new positions,” says Enver. “All the makers of a successful market are there, but the regulatory confusion is holding everyone back.”

The month’s most dramatic figure can be found in the job-seeker data, with seekers down 49% from this time last year.

“Back to back months of job-seekers being half of what they were this time last year is distressing, but predictable” says Enver. “For fifteen months and counting Londoners have been stuck in a cycle of confusion, it’s to be expected that many would choose to leave.”

Where hiring is happening (and where it isn’t)

Despite the often daunting market conditions, “the technology and regulatory spaces are a beacon of hope for those discouraged by the jobs market, and have kept us exceedingly busy the last few months,” says Enver.

Morgan McKinley report asset managers and hedge funds alike are now exploring event driven strategies to try and beat market trends.

This has resulted in a need for talented Quantitative Researchers to carry out analysis and build strategies capable of generating alpha as a result of global events.

On the tech side, data related roles continue to be in high demand, with companies focussing their efforts on understanding, analysing and using data to make principal business decisions.

The underlying workforce data, however, remains bleak says Enver.

According to figures released by the British Retail Consortium (BRC), the questions around freedom of movement are causing a national workforce shortage.

Similar trends are underway across countless sectors, and the greater the proportion of EU citizen staff the greater the business risk borne by companies, and the personal risk borne by individuals.

“Unless commitment can be given to both UK citizens based in EU countries and EU citizens currently residing in the UK, the levels of general concern will continue to drive skilled talent out of the respective nations. London is at risk of one major brain drain” says Enver.

However, we would also caution readers that the value of the Pound might well be behind the demand by EU nationals to work in the UK. We note a similar drop-off in EU nationals seeking work in the UK following the Pound’s plunge following the financial crisis of 2008.

The City Fends off Predators, but Attrition may be Biggest Threat

EY report that Mergers and Acquisitions deals in London in 2017 were up 9% in value, but had decreased by 11% in quantity.

“We look to M&A as a barometer of market health, so seeing fewer deals raises a red flag,” says Enver.

EY further found that though London remains the most attractive financial centre in Europe, as well as the top destination for financial services investment, other European countries are seeing investment growth outpace London.

“Investors are dipping their toes in other waters. Today, London can compete with the best of them, but more needs to be done to ensure that the trickle of money that would have otherwise gone to London doesn’t turn into a waterfall,” says Enver.

Though experts have been certain that London’s financial services eco-system protected its status as the region’s euro-clearing capital, that status now seems under real threat.

Deutsche Boerse announced a system that would essentially enable them to syphon off much of London’s euro-clearing market share. The plan entails profit sharing with the top ten participants in its clearing platform, Eurex.

"This market-led initiative will benefit clients and the broader marketplace through greater choice and competition, improved price transparency as well as reduced concentration risk," Eric Muller, head of Eurex Clearing said.

“This is not a subtle move by Deutsche Boerse and, if successful, its consequences could devastate large swaths of the City’s employment sector,” says Enver. “The City is sending out SOS signals, we can only hope the government takes notice in time.”