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Hays, the UK’s biggest recruiter by market capitalisation, reported a 4 per cent drop in quarterly net fee growth for the UK and Ireland, even as it announced record takings for the first quarter of 2017 (the third quarter of its 2017 financial year).

Overall net fee growth was up 10 per cent in like-for-like terms, with 18 per cent growth in continental Europe and Rest of World divisions, and 12 per cent for Asia Pacific.

However, Hays cautioned the timing of the Easter holidays – which will fall entirely in its fourth quarter this year – had boosted comparative net fee growth by around 2 per cent in Asia Pacific, 3 per cent in Continental Europe and Rest of World, and 2 per cent in the UK and Ireland.

Tough market conditions continued in the UK, around a quarter of the group’s business, where hiring activity was dampened by uncertainty around the Brexit vote in June 2016.

Although Hays did not mention the impact of the referendum vote, London showed a significant 8 per cent contraction as “conditions remained challenging”, and private sector net fee growth was down 1 per cent, despite “modest signs of improvement”.

The FTSE 250 also reported continued tough market conditions in the public sector, “exacerbated by the uncertainties created by the recent implementations of the IR35 regulations” – new tax legislation designed to limit tax avoidance which will effect contractors to the public sector. Overall, public sector net fees were down 13 per cent.

But on the basis of strong overseas performance Hays increased full year profits expectations to the upper range of analyst estimates – which span £199m and £209m – for its full year ending June 2017.

Alistair Cox, chief executive, said:

Europe delivered excellent results, led by an all-time record performance in Germany, as we continued to invest in additional headcount. Growth in Australia accelerated further and was strong across all states. In the UK, while the public sector market remained tough, we saw continued signs of improvement in the private sector market.

Hays shares hit a 52-week high on Wednesday, with prices reaching £1.70, after encouraging performances from peer PageGroup and smaller competitor Robert Walters earlier in the week.

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