Press Release: With March Brexit Deadline Looming, It's All Eyes on Passporting

Hakan Enver 12.10.2016

Passporting looks to be the deciding factor for major banks relocating out of the City.

London Employment Monitor September 2016 highlights:

  • 1% increase of jobs available, month-on-month

  • 5% decrease of jobs available, year-on-year

  • 9% increase in professionals seeking jobs, month-on-month

  • 15% increase in professionals seeking jobs, year-on-year


All calm on the job market front

At 8,400 new jobs available on the market, September saw the third highest rate of jobs released in 2016. The 1% month-on-month uptick was modest, but suggests a stabilisation of the jobs market. “Clearly there’s an ongoing appetite to recruit”, said Hakan Enver, Operations Director, Morgan McKinley Financial Services. “Given the volatility that we have been facing, two months of positive growth is welcome news”, continued Enver.

After the aggressive downturn in jobs available in the second half (H2) of 2015, September’s 5% year-on-year decrease is moderate in comparison, indicating further stability. “We’re beginning to see a flattening out of jobs being released”, said Enver.

With a 9% month-on-month increase in job seekers, it’s clear the summer holidays are over. “This time last year we had a 12% drop in job seekers due to the unusually slow start after the summer lull. What we’re seeing this year is standard operating procedure”, said Enver. With redundancies by European banks making headlines, however, it’s unclear if the post-summer spike is being influenced by market confidence or, alternatively, fears of layoffs. “Whilst the banking industry has been under scrutiny, it can make candidate decisions to commit to organisations harder”, acknowledged Enver.

Government’s proposed hard Brexit raises passporting alarms

Since Prime Minister Theresa May’s announcement that Britain would trigger Article 50 by the end of March, the government has made increasingly worrying statements about passporting which has a huge impact on the financial industry. Triggering Article 50 kicks off a two year negotiating period, for which the City had hoped the government would seek an interim agreement to preserve passporting rights. Sources inside May’s government, however, suggest that no such attempts to maintain financial services’ access to the single market are on the PM’s agenda.

According to a recent Moody’s report, it is unlikely that all passporting privileges will be lost, even in the event of a hard Brexit. “[We] consider that the third country equivalence provisions contained within the incoming MIFID 2 EU directive may provide firms with an alternative means of accessing the single market.”, said Simon Ainsworth, Senior Vice President at Moody’s. 

The MiFID 2 EU regulation comes into force in 2018. It stipulates that the UK must adopt an EU equivalent regulatory regime, leaving the door open for an alternative method of accessing the single market. Nevertheless, Ainsworth acknowledged that passporting uncertainty alone could cause some banks to move UK based activities abroad before the completion of withdrawal negotiations.

Others are not as optimistic about the outlook of passporting. Anthony Browne, Chief Executive of the British Bankers' Association has cautioned against putting too much faith in equivalence as a sufficient alternative. "They are not available for many banking or other basic financial services, provide much more limited rights at greater cost, are uncertain, and can be withdrawn at short notice”, said Browne.

Goldman Sachs said it was waiting to see just how hard a Brexit was ahead before determining whether or not to move 2,000 jobs from the City. Similarly, Lloyd’s anticipates needing to move parts of its business operations from the City in the case of a hard Brexit. Both cited passporting as the deciding factor.

Some 5,500 UK-based firms rely on passporting rights to do business. An additional 8,000 firms elsewhere in Europe use passporting to conduct business in Britain. “Given the number of businesses affected in Britain and across the EU, and the massive contributions made by City workers to the British economy, it’s frankly shocking to see the government take such a dismissive attitude towards passporting”, said Enver. “Stability is the foundation of business growth, so hopefully the government will right this course. If we are not careful, London will have a massive talent drain to countries such as France, Germany, USA, Japan and Ireland who have already turned on a charm offensive to woo our professional workforce". 

City takes note of government’s use of foreign workers as political fodder

Speaking at the Conservative party conference last week, International Trade Secretary Liam Fox called EU nationals one of the government's ‘main cards’ in EU negotiations. Additionally, Home Secretary Amber Rudd announced that companies would have to publish data on the number of foreign workers they employ. The backlash to Rudd’s controversial remarks was so swift and sudden, that the government has now taken the plan off the table.

Freedom of movement is a prerequisite of passporting rights. Without it, access to the single market is further threatened. Also, the politicisation of foreign workers has broader employment implications for the financial sector. “Many of the technical skills needed to work in niche areas of the financial sector cannot be taught in universities”, said Enver. “Recruiters look at a professional’s on-the-job experience to help place them in the right jobs”. 

Access to a highly qualified workforce with diversified skills enables British businesses to compete and thrive in the global economy. Limiting the candidate pool would have the opposite effect, limiting job growth and shrinking tax revenue. “Currently London is the hub of the financial world, but if we limit who can work in the City based on their nationality, top talent will begin to look elsewhere”, continued Enver.

Average Salary Change in London's Financial Services Roles

September 2016 saw a modest increase in average salary change compared to the previous three months.  Professionals moving from one organisation to another were able to secure on average an 18% increase in base pay. Much of this increase was driven by accounting and finance executives across both the banking and investment management sectors.

Financial Services Jobs Market September 2016

Professionals Seeking New Roles September 2016

Average Change in Salary Each Month September 2016


Further press information:
Sharmee Mavadia or Hirrah Salim
Tel: 0207 092 0023                                    

About Morgan McKinley

Morgan McKinley is a global professional services recruiter connecting specialist talent with leading employers across multiple industries and disciplines.
With offices across Ireland, the UK, EMEA, Asia and Australia, the company’s professional recruitment expertise spans banking & financial services; commerce & industry and professional services. Morgan McKinley is a preferred supplier to many of the major employers in its specialist sectors and thousands of smaller local firms.

  • In 2015 Morgan McKinley was awarded Best Banking & Financial Services Recruitment Agency at the Recruiter Awards 2015.
  • In 2016 Morgan McKinley was globally ranked by LinkedIn as 6th of the Most Socially Engaged Staffing Agencies (Large Global Firms). 
  • In 2016 Morgan McKinley was awarded Best Temporary Recruitment Company to Work For  and Best Banking / Financial Services Recruitment Company To Work For at the Recruiter’s Investing in Talent Awards 2016.
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