UK financial services firms were reluctant to take on new employees last year as the fog of Brexit hung over the sector and new tax rules limited temporary roles, a report by recruitment firm Morgan McKinley has found.
Yet despite the political turbulence, the tax, public practice, risk, investment management, and legal professions remained largely resilient, the report said.
David Leithead, chief operations officer of Morgan McKinley UK, said: “The most prominent theme throughout 2019 was how Brexit caused uncertainty, with employers reluctant to commit to hiring and job seekers hesitant to make the leap when opportunities materialised.”
The report found that banks and asset managers were particularly reluctant to hire until there’s more Brexit clarity.
Following the Conservatives’ election victory in December, many firms have grown in confidence, thankful that some clarity over Brexit has been provided.
Leithead said: “UK businesses expect more clarity in 2020. A key question is whether demand has become pent up in the system, in which case we could see a spike in hiring and an escalating war for talent in 2020.”
However, the report warned that Brexit uncertainty will continue in 2020 as the UK faces a tight timetable in which to strike a free-trade agreement with the EU.
“In these unstable, Brexit-influenced times, it is incredibly difficult to predict anything,” the report said. “This theme won’t really change until Brexit is resolved.”
Another potential headwind flagged by Morgan McKinley is the rollout of controversial tax plan IR35, which is due to take effect in April 2020.
IR35 aims to prevent workers from disguising themselves as freelance contractors as a way to pay less tax.
Morgan McKinley said it would likely lead to a reduction in short-term contracts, which could hurt recruitment in many financial services sectors.
Leithead said: “The reform of IR35 which will likely result in a negative transformation of the private sector contracting landscape, at least in the short term.”