UK sees slump in finance sector recruitment following Brexit vote

There has been a slump in financial sector recruitment in the wake of the U.K.'s decision on June 23 to leave the European Union (EU), according to the latest research.

A report from research institute and think tank IPPR has found that there was "an uncharacteristic downturn" in job postings in the finance sector during the period May/June to July/August in 2016 compared with the same period in previous years.

There was a 10 percent drop in job postings in the finance sector across England and a 13.6 percent drop in London, the IPPR said on Friday.

The institute said the findings were "striking as it is the only year in the past four where this trend has occurred."

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In fact, postings for the finance sector as a percentage of the whole economy decreased across every region in England in the two months after June's shock referendum result .

The IPPR's analysis was carried out with Burning Glass Technologies and compared jobs advertised online in key sectors across the U.K. before and after the June 23 vote - in May/June and July/August.

It compared these periods with the same timeframe in the previous three years in order to form a picture of labor market trends ahead of, and in the immediate aftermath of, the Brexit vote.

In the heart of the U.K.'s financial sector in London, the downturn in jobs affected all levels of employee, including chief executives, managers and senior officials as well as administrative occupations, the institute said.

The drop in the number of advertised jobs could be seen in the most skilled roles as well as less skilled roles, and across all salary ranges:

  1. Chief Executives and Senior Officials (mean advertised salary £83,000 ($107,900)) equating to a 26 percent drop.
  2. Managers and Proprietors in Other Services (mean advertised salary £68,000) – 29 percent drop.
  3. Quality and Regulatory Professionals (mean advertised salary £59,000) – 24 percent drop.
  4. Administrative Occupations: Finance (mean advertised salary £46,000) – 29 percent drop.
  5. Other Administrative Occupations (mean advertised salary £32,000)– 32 percent drop.

In fact, the only "uncharacteristic upturn" IPPR found was for legal professionals working in financial industry, with a 21 percent rise in postings, and customer service occupations within finance, with a 34 percent rise in postings. All of the other most frequently posted occupations suffered between a 5 percent and 33 percent drop in postings.

The data comes as speculation mounts over what kind of access to EU markets will be granted to the financial sector operating in the U.K., a sector whose strength is largely thanks to it being the home of many of Europe's financial services and their headquarters.

These businesses could relocate to the continent if access to the EU (through so-called "passporting rights") are lost in the post-Brexit negotiations. Talks have yet to begin, however, and will only do so when the U.K. triggers Article 50 -expected to be sometime in 2017.

In the meantime, the IPPR's research shows that employers in the financial sector are cautious while they don't know what impact will be felt by Brexit and what the post-EU relationship will look like.

On Monday, European Central Bank (ECB) policymaker Jens Weidmann said that the U.K. would lose its much-prized "passporting" rights unless Britain was at least part of the European Economic Area (EEA). This would mean the U.K. accepting a founding principle of the EU's single market – the free movement of people - a controversial point for Brexit campaigners and one likely to be a major sticking point in the wider EU-U.K. negotiations.

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