A potential levy on banks coupled with eurozone debt threatens to hold back the recovery in the City’s jobs market, recruiters and bankers have warned.
Demand for staff in London’s financial services sector has been one of the bright spots in the labour market in recent months, underlined by figures on Wednesday from Morgan McKinley, a City recruitment specialist, showing that new job opportunities rose 82 per cent last month compared with a year ago.
That was achieved in spite of market turbulence sparked off by the Greek debt crisis but the prospect of a bank levy and tighter regulations in some areas of financial services is creating new uncertainty.
Andrew Evans, the managing director of Morgan McKinley’s financial services division, said: “The recruitment market is very much affected by confidence. Potential increases in taxes, levies and potential economic issues – which I assume we are going to see continue in Europe for some time yet – are going to damp confidence, which could therefore affect the recruitment market.”
A quarter of 422 bankers surveyed by eFinancialCareers.com, a jobs website, said they would be forced to seek work overseas or change sector if direct taxes on banks reduced the size of the profit pool. Almost half said any higher taxes on bonuses would make them look elsewhere.
James Bennett, the website’s managing director, said: “The coalition needs to be extremely sensitive on how it handles the interlinked issues of sovereign debt reduction and banking industry reform. If the moves are too abrupt or heavy-handed, London faces the real threat of a talent exit.”
Recruiters hope any downturn would hold the City’s recovery in check rather than plunge it back to the dark days of 18 months ago.
Morgan McKinley said job vacancies rose to 5,733 last month, a 3 per cent rise on April’s figure and the second highest volume since September 2008. That compares with a nadir of fewer than 2,000 vacancies in January last year, but is some way off the peak of 10,500 in August 2007. If recovery continues at the present rate, hiring will reach pre-crisis levels in the second half of next year.
The average City salary was up 12 per cent on a year ago at £55,353. “There has been particularly strong demand in change management, risk, compliance and finance roles,” Mr Evans said.
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