Political turmoil impacting on jobs according to London Employment Monitor. The autumn season kicked off with a positive–though light–increase in jobs available. “It’s encouraging that Brexit hasn’t upturned the normal seasonal business cycle,” said Hakan Enver, Operations Director, Morgan McKinley Financial Services, describing the six percent month-on-month increase.
The year-on-year jobs data paint a more concerning portrait of the jobs landscape. Although 2017 figures have flat-lined since April, the 13 percent 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,” continued 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 percent 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” said 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,” said Enver. “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. 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” said Enver.
Government infighting stymies Brexit progress
Now well into the second year of a post-Brexit Britain, no one is any the wiser about the direction the government will take, and the nature of Britain’s future economic ties with Europe. Political intrigues and infighting across the political spectrum, particularly within Prime Minister Theresa May’s government, are reaching a boiling point, creating further distractions, and dampening hopes for a productive path forward.
Though the government insists it is committed to a business friendly resolution of Britain’s divorce from the EU, it has not been successful in quelling anxious nerves. Carolyn Fairbairn, the head of the Confederation of British Industry (CBI) struck out at the government, citing an atmosphere of despair among businesses, she called the government’s inaction and gracelessness on the issue of immigration “intolerable.”
As EU negotiations head into their fifth round of talks, the anxiety and delusion are palpable. “London is burning, it’s time the government put down the fiddle and got serious about the economic stability of Britain,” said Enver. “Businesses are doing the best they can with the stunning lack of information made available to them, but unless they know what regulatory climate they will be operating in, they cannot adapt or grow. The consequences could be devastating”.
A vulnerable City fends off predators, but attrition may be biggest threat
EY reported that Mergers and Acquisitions deals in London in 2017 were up 9 percent in value, but had decreased by 11 percent in quantity. “We look to M&A as a barometer of market health, so seeing fewer deals raises a red flag,” said Enver.
EY further found that though London remains the most attractive financial center 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.”
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,” said Enver. “The City is sending out SOS signals, we can only hope the government takes notice in time.”