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UK jobs market 'weakened significantly' around EU referendum vote time

Published 01/09/2016

Hays said conditions were particularly challenging in local government and healthcare markets (Hays/PA Wire)
Hays said conditions were particularly challenging in local government and healthcare markets (Hays/PA Wire)

Recruitment firm Hays has said the British jobs market "significantly" weakened around the time of the EU referendum , with the company flagging tough conditions in banking.

Hays said that while it is too early to tell what the longer term impact could be, uncertainty in the lead-up to and immediately after the vote "saw activity levels weaken significantly".

But the company said pre-tax profits for the full year to June 30 rose 11% to £173 million, driven by strong performances in Asia and Europe. Net fees were up 6% to £810.3 million.

Hays noted that conditions were particularly challenging in Britain's local government and healthcare markets, with trends weakening in construction and property towards the end of its financial year.

Activity in the UK's banking market decreased 12%, and 3% across the City as a whole.

Experts have warned that a significant slice of London's banking industry could be shifted to Frankfurt or Paris following Britain's decision to quit the EU.

However, chief executive Alistair Cox said he is not worried about the company's British recruitment business.

"I'm not trying to paint too rosy of a picture but the UK could put have put itself into a much worse position by now than it has done," he said.

"This is an excellent financial performance, with both earnings and cash ahead of market expectations," Mr Cox explained.

"Following the EU referendum, there is increased uncertainty in the UK market, but we have seen no evidence of any impact elsewhere. It is too early to tell what the longer term impact may be and, as ever, we will monitor activity levels closely."

Despite the drop in banking recruitment over the previous financial year, Mr Cox said the outlook was relatively stable.

"I don't think there's going to be any dramatic change in one way or the other. Clearly there are some questions in the UK around how regulation and passporting will change in the banking space, as the UK works out and negotiates with the rest of the EU how we will extricate ourselves from the EU arrangements. B ut that is going to take some time," he added.

Mr Cox was confident that regulatory pressures and hacking threats would prompt a hiring spree across the banking sector, with financial institutions demanding new cyber security and compliance staff as a result.

However, the CEO said he would have a better sense of the impact of Brexit come autumn.

Kean Marden, an analyst at Jefferies, said: " Construction and property, London and larger corporates have been most impacted. To date, Hays has seen no evidence of contagion into Europe.

"We are mindful that July and August are seasonally quiet months for the industry and September (which can be one of the largest revenue contributors of the year) will provide more meaningful insight."

Hays is expected to report its first quarter results on October 18.

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