Cost cutting at European and UK investment banks has led to a fall in new vacancies at the City of London, as the capital's financial district lags behind the country's recent roaring employment growth.
The latest monthly analysis by international recruiter Astbury Marsden points to an 11 per cent drop in new vacancies at the City of London during June compared to the same period in 2013. A total of 2,190 new vacancies were registered last month according to the firm, a decrease of 13 per cent on May.
This comes as employment across the board has grown at a rapid pace of late, with the dive in unemployment in the three months to April seeing the number of jobless plummet to its lowest level since January 2009. The Office of National Statistics (ONS) reported that this was the fastest quarterly rise in employment since records began in 1971.
According to the Astbury Marsden's managing director Jonathan Nicholson, quoted in the Financial Times, the expectations to condense balance sheets make it hard for banks to justify fresh recruitment drives.
“Such is the pressure to shrink balance sheets that even the economically profitable areas of some banks are being told they can’t expand. The recovery in investment banking jobs at the start of this year now runs the risk of petering out,” he said.
Figures suggest that compliance and risk related roles now accounted for four in 10 City hires.
The company explains that while in the last few months hiring activity has been strong at smaller and mid-tier City firms – ranging from the high frequency traders to boutique corporate finance advisory firms – this is dwarfed by hiring freezes and redundancy rounds at some of the large investment banks.
In May, Barclays followed in the footsteps of its European rivals UBS, Credit Suisse and the Royal Bank of Scotland and announced it would lay off a quarter of the workforce at its global investment bank, 7,000 staff. Analysts had attributed the decision to the UK's higher regulatory requirements forcing major investment banks to scale back their operations.