A 19% increase in professionals thinking about next career steps.
Despite Brexit and its immediate aftershocks, June saw a total of 9,060 London-based finance jobs available, an increase of 18% from May. “Considering, we entered the month with a degree of uncertainty, it was a surprise to see so many jobs released,” said Hakan Enver, Operations Director, Morgan McKinley Financial Services. “A good portion of the jobs available came in during the last week of June, indicating that financial institutions held off on hiring until the referendum results were out”.
“We expected to see those looking for new roles holding back because of Brexit, but the 19% increase shows that professionals are also thinking about their next steps,” said Enver. “It’s encouraging to see that businesses are still investing in staff, and it’s a relief that the markets have largely absorbed the initial referendum results”.
Since the referendum was first announced, there have been mounting concerns about City jobs moving to mainland Europe. “So far, talk of an exodus has been just that: talk,” continued Enver. “London remains an incredibly attractive city for investors and the UK will obviously remain a strong trading partner with EU, so people expect London to remain the leading finance centre of the world”.
Political climate a threat to stability and growth
“The bigger concern now is a political one,” continued Enver. “With the resignation of Prime Minister: David Cameron and leadership fights across the political spectrum, it remains unclear if Britain will trigger Article 50, hold a second referendum, or work to renegotiate the terms of British EU membership. Investors are likely to hold off on making any significant decisions until they see what course of action the next government will pursue. The longer this period of uncertainty lasts, the greater its potential impact on employment”.
Loss of “passporting” worries City
A major question on everyone’s minds is: will so-called passporting privileges be revoked as a result of Brexit? “Passporting currently gives the UK’s financial sector unrestricted access to the EU’s single market. Were the privilege to be revoked, the selling of Ucits, EU based mutual funds, could be subjected to additional regulations” said Enver.
According to Citigroup analyst Haley Tam, Brussels may choose to put restrictions on all Ucits sales to EU investors conducted by UK managers even those initiated from Dublin or Luxembourg. University College London economist, Morten Ravn warned that a loss of passporting rights would compel larger banks to relocate from the City to the Eurozone.
Writing for The Daily Telegraph, London Mayor Sadiq Khan vowed to ensure that the needs of the financial sector are at the fore of discussions with Brussels. “We can protect our financial sector — and jobs in London — if we remain in the single market, retain passporting rights and keep hold of euro-clearing”.
FinTech a boon for the UK
According to a new report from the professional services firm EY, the attractiveness of the UK’s financial services market has brought foreign direct investment to levels not seen since 2006. The growth is largely attributed to the fintech services offered, but also to the confidence of investors in the UK financial services sector to continue delivering growth.
"Investors are optimistic about the UK’s strong domestic market, our commitment to maintaining an environment where businesses can grow and develop, and our burgeoning fintech industry" said Omar Ali, UK financial services leader at EY. In particular, Fintech firms are leading beneficiaries of passporting, causing concerns that it may be particularly hard hit if the government is unsuccessful in its efforts to retain the privilege.
Consultants filling the gaps
Regulatory expertise is in high demand, and financial institutions are expected to increase their reliance on consultants to fill in this key skills gap. With the regulatory implications of the referendum uncertain, the reliance on consultants is expected to grow even greater. “Expect to see more contract work in the interim until the regulatory climate settles,” said Enver, citing the flexibility of contract work in the current short-term landscape.
Average Salary Change
The average salary change for those professionals moving from one organisation to another was 13% in June 2016. This was a considerable drop from 23% in May. What was apparent was less opportunistic hiring along with more junior to mid level hires being made. Both indicative of the concerns around investing during the lead up to the referendum.
Chart 1: Financial services jobs new to the market June ‘16
Chart 2: Professionals seeking new roles June ‘16
Chart 3: Average change in salary each month June ‘16