London employment levels slowed by Brexit?

Morgan McKinley has released the results from their Spring 2019 Employment Monitor, and it has shown that economic uncertainty is “biting”, despite the rise of vacancies in Q1 2019.

The Monitor specifically looked at City hiring for financial services from January to March 2019.

“We closed 2018 with a dramatically poor jobs market, because it has become virtually impossible for businesses to grow here, so we started 2019 on the back-foot,” said Hakan Enver, managing director at Morgan McKinley financial services. “We have under half the jobs and under half the job seekers we had at this time in 2017.”

“Though the first quarter of 2019 saw an increase in both jobs and job seekers, a deeper dive into the data shows that the city jobs market has shrunk, with jobs and job seekers dropping year-on-year to half the figures for 2017.”

The highlights from the London Employment Monitor for Spring 2019 are as follows:

• 9% increase in jobs available, quarter-on-quarter.
• 9% decrease in jobs available, year-on-year.
• 2% increase in job seekers, quarter-on-quarter.
• 15% decrease in professionals seeking jobs, year-on-year.

Morgan McKinley stated: “Though the first quarter of 2019 saw an increase in both jobs and job seekers, a deeper dive into the data shows that the city jobs market has shrunk, with jobs and job seekers dropping year-on-year to half the figures for 2017.”

“Even with all the uncertainty of the last few years, there was always an assumption that, come the 29 March 2019, we would have some answers. Yet, here we are—still waiting.”

The consultancy firm has cited the ongoing years of Brexit-related confusion as the predominant reason behind this decrease. Businesses and job seekers feel that they are less able to take risks in such an unstable climate.

This consensus matches up closely with other reports that have been conducted around this topic, such as IHS Markit’s PMI survey and BDO’s Business Trends Report.

Enver said: “The inability of the government to reach a consensus on a Brexit deal has crushed confidence among City employers. Even with all the uncertainty of the last few years, there was always an assumption that, come the 29 March 2019, we would have some answers. Yet, here we are—still waiting.”

Now that the original deadline has been and gone, and the country seeming no closer to formulating a deal that the majority of parliament will get behind, the EU27 has had no choice but to extend the deadline once again—this time until the 31 October.

“The government had over two years to do its homework and complete the assignment,” said Enver. “Right before the deadline, they finally decide to try to work with the opposition to protect the people, instead of their own political power.”

“It is the smaller firms that are now being hit hardest, as they have fewer resources with which to plan and adapt.”

He continued: “They didn’t do the homework, they didn’t complete the assignment, and now they are asking for one extension after another as jobs continue to flow out of London, with Dublin by far the biggest beneficiary, followed by Luxembourg, Paris, Frankfurt, and Amsterdam. It is astonishing.”

Although the country – businesses included – remain uncertain of what the future will involve for the economy, Enver has gone on to emphasise that banks are having to act ahead of the curve.

“For the bigger banks, the 29 March was the deadline—there are no extensions,” said Enver. “They have rolled out their Brexit plans and are deftly deploying staff and other resources to key EU locations.”

“Right now, if you are ambitious and hardworking, studying and working in the UK is looking less and less like the way to get ahead.”

Unfortunately for SMEs, they are finding themselves most impacted by Brexit negotiations.

Enver said: “It is the smaller firms that are now being hit hardest, as they have fewer resources with which to plan and adapt.”

In the face of this ongoing uncertainty, the UK’s technology sector has proven that it is able to continue to adapt and present the country with a source of lucrative revenue, having earned £2.5bn in new investments last year (according to London & Partners and PitchBook).

Although the technology sector still remains “the envy of Europe”, Morgan McKinley has outlined that it has just seen the lowest rate of growth in three years—thus proving that the economic juggernaut is now also beginning to feel the strain.

“It will take us a decade, at a minimum, to clean up this mess, which is why we can’t afford another six months of uncertainty. And we can’t afford a hard Brexit.”

“Financial services and technology jobs were the crown jewels of the UK economy, attracting the best and the brightest to the UK—yet financial services are struggling to recruit top technology talent in the wake of Brexit,” Enver explained.

“Right now, if you are ambitious and hardworking, studying and working in the UK is looking less and less like the way to get ahead.

“It will take us a decade, at a minimum, to clean up this mess, which is why we can’t afford another six months of uncertainty. And we can’t afford a hard Brexit.”

Enver concluded: “Sadly, the government has played it in such a way that we may now end up with both.”