Financial roles in the City of London continue to decline. There are many reasons for this and different solutions. Is deregulating the answer? One analyst thinks so.
New figures from Morgan McKinley’s Q1 2025 London Employment Monitor reveal a 12 percent quarter-on-quarter surge in financial services hiring. For how long can this continue? Maybe not for too long since this early momentum appears under pressure.
Trump’s return to the White House, fresh trade tariffs, and persistent global volatility are fuelling caution in the City, with job openings still down 11 percent year-on-year. Other reasons include AI-led automation, which continues to reshape headcount needs.
Mark Astbury, Director at Morgan McKinley, suggests that London must act boldly to protect its global edge—from relaxing listing rules and M&A regulations to incentivising green finance and fintech.
Astbury sees the current data as affected by seasonal variation: “Financial services hiring in London saw a 12% quarter-on-quarter increase between Q4 2024 and Q1 2025, reflecting the sector’s typical seasonal rebound. The end-of-year slowdown, driven by budget constraints, holidays and strategic planning, traditionally gives way to a more active hiring environment in the first quarter.”
What could derail this? Astbury puts the blame on the door of the U.S.: “This early momentum was quickly disrupted as Donald Trump’s return to the U.S. presidency brought renewed volatility to global markets. The formal introduction of new trade tariffs under his administration has deepened concerns around protectionism and global economic fragmentation, dampening investor confidence and curbing corporate risk appetite.”
The data is also likely to shaped by structural factors, according to Astbury: “The 11% year-on-year decline in job availability points to underlying structural pressures within the industry. Persistent inflation, elevated interest rates and geopolitical tensions are fostering a conservative, risk-averse approach to hiring.”
We must also look to the European union for answers: “At the same time, Europe’s surge in defence spending is opening up long-term investment opportunities in areas like military technology and cybersecurity. Yet, this hasn’t translated into short-term hiring boosts, particularly as firms remain focused on efficiency. Many institutions continue to streamline operations through AI adoption and automation, often reducing headcount in entry-level and support roles that fall outside direct revenue generation.”
Astbury calls on Starmer’s government to deregulate: “London’s financial ecosystem continues to face headwinds from Brexit and growing competition from emerging financial centres. To maintain its global stature, the UK government must adopt bold, reform-driven policies. Key measures could include relaxing regulatory barriers to M&A activity, revising capital requirements, and simplifying listing rules to encourage IPOs.”
Not content with this, Astbury adds: “Furthermore, targeted tax incentives in fintech and green finance could stimulate innovation, while stronger trade partnerships with non-EU markets may help mitigate the long-term impact of US protectionist policies. A proactive approach is essential to reigniting confidence and reinvigorating investment in the City.”
Astbury concludes: “Looking ahead, hiring will be shaped by macroeconomic conditions, regulatory developments, and tech innovation. Now that tariffs have been enacted, firms with international exposure are reassessing strategy and headcount plans, especially those tied to cross-border finance and trade.”
Is such a relaxation of the rules the answer? This is something for Starmer, Rayner and Reeves to mull over. This needs to be carefully considered against the UK government’s wider industrial strategy.
