Brexit sees number of City jobs available in London financial sector drop 27%

Morgan McKinley said the July fall was not as bad as expected given 'the gravity of the referendum'

Zlata Rodionova

Wednesday 10 August 2016 09:40 BST

Morgan McKinley recorded 7,890 new jobs last month, down from 10,920 a year earlier, and down from 9,060 on the previous month (Getty Images)

The number of job vacancies in London’s financial sector dropped in July as firms dealt with the fallout from UK’s vote to leave the EU, a recruitment agency said.

Morgan McKinley's London Employment Monitor for July found available jobs had decreased by 12 per cent compared to the previous month.

On a year-on-year basis, job vacancies fell by 27 per cent.

Morgan McKinley recorded 7,890 new jobs last month, down from 10,920 a year earlier, and down from 9,060 on the previous month.

Meanwhile, the number of professionals looking for new positions dropped by 14 per cent month-on-month and 13 per cent year-on-year.

The recruitment firm said the July fall was not as bad as expected given “the gravity of the referendum”.

“Hiring slowed as institutions found themselves in a post-Brexit limbo, but the impact of the referendum was not as aggressive as we expected”, said Hakan Enver, operations director, Morgan McKinley Financial Services.

Seasonal factors such as people taking their summer holidays were also to blame for the hiring slowdown, the report found.

Morgan McKinley attributed the employment backlash to decisive political leadership and a growing sense that Article 50 will either or not be triggered or that its consequences will be moderate or slow to materialise.

Enver said the prompt formation of a new government was encouraging.

He also dismissed fears that the Brexit vote would cause London to lose its position as a leading financial centre if banks materialise threats to move some of their operations out of the UK.

“An exodus would require individual businesses to potentially relocate thousands of employees, which simply isn’t logistically or financially feasible,” Enver said.

“Up to a million Londoners work in the financial sector. Only a small portion of them have the flexibility to up and move to a new country, and no other region can compete with the quantity and calibre of financial professionals,” he added.

Since the vote for the UK to leave the EU, pessimism has risen among firms, a survey by YouGov and the Centre for Economic and Business Research found.

The number of businesses that reported feeling pessimistic about the economic outlook for the next year spiked to 49 per cent in the week following the referendum from 25 per cent before.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

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6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

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6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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A fall in confidence could lead to a drop in investment and hiring freezes, the survey suggested.

“People are currently in one of two camps: those with a negative outlook who fear a recession, and those with a positive one, who expect Britain to weather the Brexit storm.

“We will have more clarity in the months ahead as to which camp is right, but in the meantime it’s business as usual,” Enver said.

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