This week, we held our quarterly Finance Forum breakfast, where we presented our latest analysis on the macroeconomic trends shaping London’s financial services landscape. The session also examined how these dynamics are beginning to influence the labour market. A summary of the key insights follows.

Market volatility has begun to ease, paving the way for renewed investment activity. Hiring is once again emerging as a core component of strategic decision-making. The recent announcement of the first trade agreement between the United Kingdom and the United States has helped to temper industry-wide concerns. While this marks a positive step forward, certain sectors, including automotive, will still feel the pinch from new tariffs, with firms such as Jaguar Land Rover facing increased costs.

There is cautious optimism that the deal will evolve into a more comprehensive arrangement. If this includes progress on mutual recognition of certification, it could provide a meaningful boost to the UK’s services sector. Less widely reported, though no less significant, is the reduction in tariffs on a number of US goods already being imported, a move which may help to relieve inflationary pressure in the short term.

In parallel, trade negotiations between the United Kingdom and the European Union appear to be gaining momentum. While longstanding issues (fisheries in particular) remain unresolved, geopolitical developments, especially the growing military threat posed by Russia, may compel Brussels to take a more pragmatic stance. The ongoing conflict in Ukraine is expected to keep upward pressure on UK defence spending, irrespective of any potential ceasefire. With Russia now scaling up their military positions in Belarus and near the Finnish border, the prospect of a formalised EU military force appears increasingly likely.

On the domestic front, macroeconomic data from the first quarter has outperformed expectations. Higher-than-forecast GDP growth, coupled with declining inflation and falling interest rates, suggests a favourable environment for further economic recovery. Foreign exchange markets warrant close observation. A marked shift of capital from the US dollar to the euro is under way. The recent moderation in tone from Donald Trump may influence this trend, making the dollar-euro exchange rate a key metric to monitor in the months ahead.

In terms of labour market indicators, internal recruitment roles have seen a modest increase in recent weeks. This is often an early sign of renewed hiring activity, as organisations typically begin expansion by bolstering their talent acquisition functions.

Despite the imposition of new tariffs from 2 April, April recorded the highest number of private-sector job vacancies in London since 2022. Much of this growth has been driven by technology and financial services, with fintech now the fastest-growing segment.

Marketing roles are also in strong demand, making the function the second most recruited for across the capital. This mirrors previous economic cycles, where marketing is often the first area to be cut during downturns and among the first to scale up in periods of growth.

Elsewhere, the tax function is experiencing an exceptional year in terms of vacancies. This appears to be a direct consequence of recent tariff implementations, as firms seek to navigate an increasingly complex fiscal environment.

Insurance is also worth spotlighting. Despite record profits posted in 2024, this has not translated into significant hiring activity. Claims roles are in decline, while investment in artificial intelligence and technological infrastructure continues apace. The sector is undergoing a fundamental transformation, and the skillsets in demand are shifting accordingly.

Looking ahead, 15 July is a key date for the diary. The Chancellor is scheduled to deliver the Mansion House speech, where he is expected to outline a series of reforms to the financial services sector. These include proposals to:

• Remove the separation between retail and investment banking
• Introduce legislation concerning investment funds listed on AIM
• Launch the PISCES initiative, aimed at bolstering the scale-up ecosystem

The Government has made clear its intention to pursue a pro-growth agenda. For the financial services industry, a cornerstone of the UK economy, there is cautious anticipation that this rhetoric will be matched by meaningful action.

For those interested in attending our next Finance Forum breakfast, where we will analyse the implications of the Mansion House reforms in greater detail, please do get in touch.

---