The City of London showed definitive signs of a recovery in the first quarter of this year, as ten out of 12 business indicators improved, with job vacancies and candidates reaching their highest level since 2008, according to International Financial Services London.
The City Indicator Bulletin, which is produced on a quarterly basis, shows that vacancies in the City rose 47 per cent from the end of 2009 to reach 16,223 in the first quarter of 2010. Meanwhile, the number of candidates also picked up, hitting 24,450 in the first quarter of this year. However both vacancies and candidates remain well below the highs they reached in most quarters of 2007 and 2008.
Such figures will provide some reassurance for the financial services industry, amid worries that expected further tax increases, mounting regulations and newly-minted European Union curbs on hedge funds and private equity will hurt London and encourage an exodus of talent.
Office space take-up in the City of London and the Docklands rose sharply in the first quarter, increasing by over 50 per cent: this represents the strongest quarterly increase in office space usage in three years, and continues a positive trend that started since levels bottomed in the first quarter of 2009.
Due to this, and with fewer new developments coming onto the market, supply of office space has tightened and accordingly prime City rents went up in the first quarter to reach £47.50 per square foot.
While the volume of financial services business increased in Q1, it did so only marginally, but the survey showed expectations of a bigger improvement in the second quarter, with respondents becoming much more positive on the short-term outlook.
“UK wide indicators provide some encouragement as business volumes have edged up since Q2 2009 with a surge expected during the second quarter of 2010. Firms however are increasingly concerned about the threat to growth in business over the coming year from statutory legislation and regulation,“ said Duncan McKenzie, IFSL’s director of economics.
According to the IFSL’s data, financial services continue to be central to the overall UK economy, with the country having a financial services trade surplus of £38 billion (around $54.8 billion) for 2009. Also, according to PricewaterhouseCoopers, the industry made an estimated tax contribution of £61 billion in the financial year 2008/2009.
And although the effects of recent tax and legislative changes are unlikely to have fed through yet, London has so far retained a healthy share of international trading in a number of markets, capturing 36 per cent share of global foreign exchange trading, 18 per cent of international bank lending, 20 per cent of hedge fund assets and 17 per cent of foreign equities turnover.