Good Month, Bad Year

Morgan McKinley report gives mixed messages.

Good Month, Bad Year

UK & Europe

The London Employment Monitor August 2016 form Morgan McKinley has recorded a four per cent increase of jobs available over the past month but a 20 per cent decrease in that figure year-on-year. The company says the generally sleepy month of August surprised everyone with the month-on-month rise in both jobs available and jobseekers. “The British ethos of ‘keep calm, it's business as usual’ is clearly on full display in this month’s numbers,” said Hakan Enver, operations director, Morgan McKinley Financial Services. “Factoring in Brexit, summer breaks and the bank holiday, a four per cent increase across the board is remarkable,” he added.

With the pound having been at its weakest against the US dollar in 31 years, as well as growing concerns about terrorist attacks on the continent, more Britons opted to take staycations during this year’s bank holiday breaks. In all, six per cent more than last year spent their holidays in the UK. “I suspect the staycation trend influenced this month’s job seeker data, as more people opted to stay closer to home. This allowed more time for professionals to consider their careers and therefore, register their interest with certain recruitment organisations,” said Enver. 

A few short months after Brexit, a sense of optimism has returned to the City. A recent EY report found that among the largest financial institutions, fears of post-Brexit chaos have largely subsided, concluding that “the immediate impact of the referendum has not been as stark as many initially feared”. A rising pound and news that unemployment has dropped to its lowest rate since 2005, coupled with Prime Minister Theresa May’s announcement that there will be no second referendum on EU membership, have all added to the sense that no crisis is forthcoming. Some are going even further, speculating that relief from onerous EU regulations like bonus caps and tax-levies could give the British financial industry a healthy boost. BBVA in particular has come out against the caps, which were put in place in 2014, saying they are restricting the bank’s ability to attract the best executives from the technology sector.

But the outlook isn’t all rosy. Year-on-year jobs available decreased by 20 per cent and job seekers fell by six per cent year-on-year, mirroring the trend of decline during the first half of 2016 (H1). “There’s no question that 2016 has been a tougher employment climate than 2015,” said Enver “and the ongoing uncertainty as we wait to see the terms of the UK’s negotiations with the EU is clearly casting a shadow over H2.”

Two key negotiation items remain foremost on everyone’s minds. The first is the right of EU citizens to work in London. “Free movement of high quality financial and related professional services talent across the EU is essential to the UK remaining a leading financial centre”, said the financial services lobbying group TheCityUK. 

The second issue of concern is the retention of passporting rights. Though it has no intention of relocating its headquarters from London, Lloyd's Chairman John Nelson has made clear that the loss of passporting privileges would require Lloyd’s to move part of its business to an EU member state.

“Failure to protect passporting and to secure the right of EU citizens to live and work in London would certainly have ripple effects on City employment,” said Enver. “Which is why we’ll continue to see industry and political leaders make both issues central parts of negotiations. And the stronger our economy, the stronger our negotiating position”.

Though Berlin sought to capitalise on the Brexit vote with a snazzy advertising campaign urging London startups to relocate to the German capital, London startups out-raised it by over twice as much funding in H1. 

“London is where innovation meets investment. It speaks to the clout of our financial sector that we outperformed other known innovation hubs like Stockholm and Berlin,” said Enver. The London-based leading venture-capital firm Northzone announced that though investors worldwide voiced concerns about Brexit, it was able to attract 300 million euros in investment, a record amount over the firm’s 20-year existence.




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