Uncertainty relating to the imminent referendum on Britain’s membership in the European Union (EU) is creeping in. As a result, widespread hiring appears to have largely frozen, the Financial Times reports. With companies holding off on making decisions until after the Brexit vote on the 23rd June, the impact has been felt to a larger degree in the financial services industry as the consequences of a ‘leave’ vote would be felt to a larger degree than across other industries.
If Britain ends up leaving the EU, not only is London’s position as the world’s main currency trading center likely to be affected, but investment banks could lose access to the single European market. That’s over 500 million people spanning across 28 European member states. Moreover, overseas banks that have UK headquarters may find themselves having to re-locate most of their operations to countries within the EU.
Financial services employers who rely heavily on recruiting EU workers are now reluctant to commit to hiring as a Brexit could present free movement issues, the FT asserts.
Lower-risk temporary recruitment is proving to be a safer choice during these times of uncertainty.
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The uncertainty in the hiring market is compounded by macroeconomic concerns relating to declining commodity prices and an economic slowdown in China, together with the fact that investment banks have been experiencing pressure from falling trading revenues and a general slowdown in capital markets activity.
According to the Financial Times, Nomura is cutting more than 500 of its European staff and abandoning most of its European equities business. Barclays has slashed 8,000 jobs in four months, making it the fastest headcount reduction in at least five years as it attempts to implement huge cost-cutting measures.
In the first quarter of 2016, the financial services sector was badly hit and it was the slowest start to any year since 2009 for global investment banking fees. According to Thomson Reuters, fees in Europe declined 27 per cent compared with the previous year and proceeds from UK IPOs fell 50 per cent year-on-year, according to professional services firm PricewaterhouseCoopers.
There is also evidence of a slowdown in the mass end of the recruitment market. Recruitment consultancy Morgan McKinley has reported that the number of available jobs decreased 21 per cent between February and March, and that job seekers withdrew from the market. PageGroup has reported an increase in profits from temporary placements of 10.6 per cent in the first three months of the year, while permanent positions saw a growth of only 1.6 per cent.
With permanent hiring posing a bigger commitment for companies, lower-risk temporary recruitment is proving to be a safer choice during these times of uncertainty.