Job vacancies in London’s financial services sector have fallen by 17 percent in the third quarter of 2023 compared to the same period in 2022.
Recruitment firm Morgan McKinley attributes this decline to several factors, including economic uncertainty, ongoing post-Brexit adjustments, and global political events.
The financial sector in the City of London, often referred to as the “City,” has faced challenges in recent years due to a combination of economic pressures, including inflation, war, and Britain’s departure from the European Union. The recruitment data released by Morgan McKinley shows a slowdown in hiring activity as organisations focus on managing these uncertainties.
Economic Uncertainty and Strategic Hiring
Mark Astbury, associate director at Morgan McKinley, commented on the slowdown in recruitment, citing the current economic environment. “Ongoing post-Brexit adjustments, inflation, and economic uncertainty are forcing firms to cut back on aggressive hiring and prioritise strategic hires,” Astbury said.
Astbury also highlighted that hiring is likely to remain cautious in the coming months due to external political factors. The Labour government’s upcoming budget on 30 October, as well as the U.S. presidential election in early November, are expected to contribute to a subdued recruitment market.
Rise in Demand for Compliance and ESG Roles
While overall hiring activity has declined year-on-year, the Morgan McKinley data did show a 7 percent rise in job vacancies in the third quarter of 2023 compared to the previous quarter. This uptick in recruitment was driven primarily by demand in certain specialised areas, including regulatory compliance and digital transformation. With businesses increasingly focused on adapting to regulatory changes and advancing their digital capabilities, roles in these areas have seen growth despite broader economic uncertainty.
Additionally, there has been a growing demand for professionals in ESG-related roles. As companies continue to prioritise sustainability and corporate responsibility, the need for expertise in environmental, social, and governance initiatives is becoming increasingly important within the financial services sector.
Brexit’s Lasting Impact on City Jobs
The report on job vacancies comes just days after Michael Mainelli, the Lord Mayor of the City of London, provided his own perspective on the impact of Brexit on the financial sector. Speaking to Reuters, Mainelli estimated that Brexit had resulted in the loss of around 40,000 jobs from London’s financial centre. According to Mainelli, the City had employed around 525,000 people in 2016, the year the UK voted to leave the European Union, but many jobs have since shifted to other European financial hubs.
Mainelli noted that Dublin has benefited the most from the exodus of roles, gaining approximately 10,000 positions. Other cities, including Milan, Paris, and Amsterdam, have also attracted financial sector jobs as companies adjust their operations in response to Britain’s exit from the EU trading bloc.
“Brexit was a disaster,” said Mainelli, talking about the challenges the City has faced since the referendum. Although London remains a global financial centre, the long-term impact of Brexit on the sector continues to shape its recruitment landscape.
