The City of London’s financial services sector experienced a modest hiring rebound in the first quarter of 2025, according to Morgan McKinley’s latest London Employment Monitor.
However, the early-year optimism is being tested by renewed global uncertainty and the escalating trade tensions triggered by President Trump’s return to office.
The report shows a 12% increase in job vacancies in Q1 compared to the previous quarter—largely reflecting the industry’s seasonal bounce as firms resume hiring activity following year-end budget freezes and strategic planning cycles. Yet despite this quarterly uptick, job availability is still down 11% year-on-year, underlining the structural challenges gripping the sector.
Mark Astbury, Director at Morgan McKinley, warned that wider macroeconomic conditions continue to erode confidence.
“The quarter’s seasonal rebound is welcome, but it was quickly overshadowed by geopolitical disruptions, particularly the reintroduction of trade tariffs under President Trump,” he said. “Protectionist rhetoric, market volatility, and falling investor confidence are creating a highly risk-averse environment across the City.”
While defence-related investment in Europe has grown in response to global instability—particularly in military tech and cybersecurity—it has yet to deliver any noticeable uptick in financial hiring. In fact, many financial institutions remain focused on streamlining operations, often through AI-led automation, which continues to displace entry-level and back-office roles.
Persistent inflation, elevated interest rates, and fears of economic fragmentation are also contributing to cautious hiring strategies. As a result, firms are prioritising talent that drives resilience and transformation, with sustained demand for regulatory compliance officers, risk analysts, internal auditors, and AI-capable developers and data engineers.
“The sector is undergoing a quiet recalibration,” Astbury explained. “Organisations are doubling down on roles that support operational efficiency and future-proof business models, particularly in data, governance, and automation.”
The UK’s departure from the EU continues to cast a long shadow over the City’s competitiveness. As rival financial centres grow in prominence, Astbury stressed the need for bold reform to safeguard London’s global standing.
“To revitalise the sector, the UK government must pursue targeted policy interventions,” he said. “That includes easing M&A regulation, reforming capital requirements, and streamlining IPO listing rules. Tax incentives for fintech and green finance could also spur innovation, while deepening trade ties beyond the EU could help counterbalance the impact of US protectionism.”
He added that new regulatory developments—such as MiFID III and the introduction of the Audit, Reporting and Governance Authority (ARGA)—are likely to drive recruitment in compliance and governance-focused roles in the months ahead.
Looking forward, Astbury believes hiring trends will hinge on the trajectory of global markets, regulatory reform, and how effectively firms can integrate transformative technologies.
“Now that tariffs are in place, international financial institutions are re-evaluating their structures and strategies—particularly in areas with high cross-border exposure,” he noted. “Unless global confidence returns, most firms are expected to remain cautious, focusing hiring on functions that reinforce risk management, operational robustness, and regulatory readiness.”
With London at a crossroads, the coming months may determine whether it retains its financial pre-eminence or cedes ground to more aggressive international competitors.