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London's financial job market: Is a crash coming?

London's financial job market

In the aftermath of a challenging and transformative year, the employment landscape in London's financial sector underwent a seismic shift, marked by a staggering decline of nearly 40%, as reported by recruitment firm Morgan McKinley on Monday, January 15, 2024 (source: Reuters). The intricate interplay of market turbulence and a surge in inflationary pressures compelled employers to adopt a stringent and cost-cutting approach, resulting in a substantial reduction in job opportunities within the financial domain.

Delving into the specifics revealed by Morgan McKinley's comprehensive London Employment Monitor, the figures for the year 2023 painted a stark picture. A significant 38% reduction in available positions was observed compared to the preceding year, accompanied by a noteworthy 16% decrease in the number of individuals actively seeking employment within the financial sector. The fourth quarter of 2023, in particular, emerged as a critical juncture, witnessing an alarming 42% drop in available jobs compared to the same period in the previous year. This downturn marked the most substantial decline since the global financial crisis of 2008, as explicitly emphasized in Morgan McKinley's detailed report.

Despite the reported robust profits within the banking sector, the financial landscape grappled with multifaceted challenges, including margin pressures stemming from persistent high inflation, a pronounced slump in dealmaking activities, and the escalating uncertainties on the geopolitical front. These factors collectively cast a shadow over the overall employment outlook within the financial industry, highlighting the vulnerability of the sector to external economic and geopolitical forces.

The impact of these challenges extended beyond theoretical discussions, with significant workforce reductions witnessed among major financial institutions. This contributed further to the overall contraction in the job market, exemplified by Barclays' implementation of substantial job cuts, involving the elimination of thousands of positions. Concurrently, Swiss rival UBS engaged in a noteworthy restructuring process, including strategic staff reductions in its London operations. These actions were taken in the aftermath of the integration of the struggling Credit Suisse, underscoring the ripple effect of financial challenges across global financial institutions.

Hakan Enver, Managing Director of Morgan McKinley UK, offered valuable insights into the shifting dynamics of the market. He pointed to a discernible change in trends after a year characterized by robust pay growth and heightened hiring activity, primarily driven by a tight labor market. Enver noted a concurrent decrease in the number of job seekers, a contraction in candidate supply, and a reduced overall number of job opportunities within the financial sector.

The sustained economic slowdown and escalating geopolitical conflicts, particularly in the Middle East, eroded employer confidence, prompting a significant pullback in both spending and hiring activities.

Despite the challenging circumstances, Enver astutely highlighted a silver lining. He noted that the number of job opportunities in the financial sector last year was broadly on par with levels observed in 2019. This observation, preceding a substantial post-pandemic hiring surge, hints at potential resilience in the job market despite the recent adversities. It underscores the adaptability and inherent strength of the financial sector, suggesting that it may weather the storm and emerge resilient in the face of ongoing economic challenges.


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