A slowdown in hiring activity in the UK has persisted after the country’s vote to leave the EU, weighing on the market for City investment banking jobs, recruitment agency SThree said.
The company on Monday reported a 16 per cent fall in gross profit in its UK and Ireland business in the first half of 2017 compared to the same period last year, as public sector reforms — including the government’s cap on contract rates — and the Brexit vote “continued to dampen performance”.
In particular, Brexit-related uncertainty — coupled with increasing cost pressures on investment banks — knocked recruitment in the UK banking and finance sector, said Gary Elden, chief executive.
“There’s still uncertainty in banks over what departments are going to be based where in Europe,” he said. Some banks are holding bank on filling roles, while in other cases candidates are unwilling to move, he added.
Last year, three of SThree’s top five investment banking clients froze hiring. While they are recruiting again, they are still “tighter on cost” than before the Brexit vote.
There has been no notable uptick in European financial services hiring so far, Mr Elden said, adding that if banks do shift staff across Europe, it would be a boon for the company.
“The UK is the most competitive market we’ve got — but Frankfurt, Paris and Dublin are not as competitive and we’ve got strong businesses in those locations.”
The impact of the Brexit vote has also continued to drag on UK hiring in recent quarters for rival white-collar recruitment companies Hays and PageGroup, who have relied on their international business to boost profits.
SThree recorded healthy growth in overall profits and revenues in the six months to May 31. Profits before tax increased to £19.2m from £12.8m, a 5 per cent rise when stripping out the benefits of currency fluctuations, while revenues climbed 7 per cent to £521m. About 80 per cent of its profits were generated outside the UK and Ireland.
Rahim Karim, analyst at Liberum, said SThree was “well placed to weather the current uncertainties”, citing its exposures to higher growth markets such as Europe and the US. Gross profits at SThree were up 16 per cent and 7 per cent in the US and Europe respectively in the first half.
Despite the slowdown in the UK, Mr Elden said candidates were increasingly “looking at alternative options outside the traditional banking world”, including fintech start-ups.
While smaller fintech companies do not tend to offer the salaries associated with banking, they were enticing candidates with the offer of equity, he said.