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London jobs market shrinks as Article 50 approaches

The number of jobs available within the City of London has shrunk by almost a quarter in February as companies play a waiting game ahead of the U.K's exit negotiations with the European Union.

The number of jobs available in the City decreased 23 percent from 9,015 in January to 6,945 in February, according to the Morgan McKinley London Employment Monitor. Year-on-year, the number of jobs available decreased by 17 percent.

There were also fewer professionals seeking jobs, according to the research, with a 12 percent decrease from 12,068 in January to 10,626 in February.

Clouds over the City of London
Gregory Warran | Flickr | Getty Images
Clouds over the City of London

As the U.K. Prime Minister prepares to trigger Article 50 later this month, businesses seem to be reacting by moving jobs away.

"Brexit has pushed institutions into two camps," said Hakan Enver, operations director at Morgan McKinley Financial Services, in a statement accompanying the report.

"On one side, we've got the 'business as usual' team, and, on the other, we have the institutions that are tired of the government's hemming and hawing and have already begun to move jobs to other EU countries.

"It's the latter group that's contributed to the quarter drop in jobs available."

Part of the problem is that Brexit talks will take around two years, and it is uncertain what the trading relationship will be like between the U.K. and European Union following the split. According to Enver, this is not a problem for small businesses which can quickly adapt, but for the large firms.

"Large institutions…are currently using up incredible institutional resources to project years out and plan for a future that changes from one day to the next. For many, it's simply proving easier to get ahead of the worst-case scenario and get out of London now."

Compounding this issue for the U.K. is new evidence from UBS indicating how some euro zone firms may react to Brexit. 600 firms were asked about their plans by the UBS Evidence Lab Survey.

Almost a third of euro zone firms expect to cut their investment in the U.K.; 24 percent expect to cut their investment somewhat, while 8 percent may cut significantly.

"On a sector basis, companies in the Materials sector, followed by Industrials, expect to respond more firmly than firms in the Consumer space: 46 percent of materials companies expect to reduce investment 'somewhat' or 'significantly'" the report said.

Meanwhile, 10 percent of firms expect to relocate all their capacity away from the U.K., while 31 percent may remove a large amount of their capacity. This could prove to be a boon for the euro zone, as fewer than half the firms pointed to it as a potential relocation destination.

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