15 Years Since the Global Financial Crisis
No one can argue that the last 15 years have been somewhat of a roller coaster for Financial Services in London/UK. We’ve seen booms and busts, reports of huge profits, as well as huge profit warnings, bank runs, bankruptcies, rises and falls of the FTSE/£, a lot of hiring and firing and the odd fine for unruly behaviour.
Let’s not also forget, the efforts businesses have made to change the ratio of underrepresented communities in the workplace, the “drive” of ESG, the integration of Gen Z and Millenials into the workplace, the fascination and/or illusion of the crypto world, the list goes on! It’s fair to say there’s been a lot to deal with. I haven’t even mentioned the show (comedy or drama depending on which way you swing) of the UK government and that period of time (I won’t mention the name right now) where the world completely shut down and we were locked in our houses for months on end, not being able to see loved ones, or knowing what the following week/month was to bring.
Morgan McKinley’s London Employment Monitor, which tracks City job numbers, job seekers and average salary changes of those moving from one financial services job to another, is now in its 19th year and a key benchmark for the business media including Reuters, Bloomberg, City AM, Financial Times, The Times, Financial News, London Loves Business and The Daily Telegraph.
Remarkably, 2023 signifies 15 years since the Global Financial Crisis. More commonly known as the credit crunch, the event marked widespread job losses, not to mention, many business closures, causing the unemployment rates to rise to 8.4% (2011). UK GDP fell by just under 6% and then continued to drop for a further five consecutive quarters. During 2008 and 2009, the Bank of England base rate dropped from 5% to a record low of 0.5% and hovered around that level for some time after.
Over the next few years, certainly until the middle of 2015, the number of job opportunities available rose. Following the UK General Election in May 2015, the volumes of jobs started to decline. Whilst there appeared to be some form of recovery exactly a year later, especially following the UK’s decision to leave the European Union, this was very short lived and the number of new roles available continued to drop until Q3 2020. Shortly after, and through 2021 there was a huge rebound post-COVID and the financial services sector was hiring at an extraordinary rate.
Whilst it was not expected to last forever, come 2022, the hiring markets cooled, albeit a number of organisations were looking to replace staff rather than invest in attracting additional talent. By now, the cost of living crisis was beginning to impact a wider audience and many candidates took the opportunity to move jobs and demand a high salary increase. What we can take from this, is a trend beginning to form that comprises a 4 year cycle with job volumes rising and falling. With that logic in mind, whilst the number of job opportunities in 2023 may plateau for a period of time, it won’t be until the middle of 2024 that the UK sees a true recovery in London Financial Services.
As you’d expect, the average salary change for financial services professionals in London moving from one organisation to another, has fluctuated considerably over the last 4 years (the time Morgan McKinley started documenting this data). What is noticeable is the trend line has moved in tandem with the volume of jobs available. As the market picks up, companies compete for talent which in turn triggers a salary war. This has not been more evident than in 2022, where across the year, the average salary change was a high of 22%. When you compare this to 2019, where it was 18%,16% in 2020 and 19% in 2021, the time to have moved jobs was certainly last year! At the half year mark of 2023, this has dropped back to 16% with several factors at play driving this number down.
Job numbers have dropped compared to the prior year, albeit hovering at levels last seen in 2019. The UK is also in the midst of a challenging economic climate with high inflation, which is beginning to fall but at a slower rate than expected. According to the experts, the cost of living crisis should ease in 2024 at the same time the job market should realign and show considerable signs of improvement.
But it won't fully be over until wages catch up across the UK. Whilst London Financial Services offers a higher average salary, figures do show that this has fallen by some margin, there is no doubt the wider market implications have impacted this. London does often operate as a bubble compared to the wider UK, with the average cost of a house now at £543,000, it is understandable why salaries are on average higher. But even then, nothing is ever impenetrable to market forces, and whilst we continue to live through a strict cost control environment, it is a case of patience, before we see the boom times once again reappear. And it won’t be long either
