The number of asset management employees flatlined in the uk last year while increasing in rival fund centre luxembourg, in a sign of how brexit uncertainty has taken a toll on hiring in the city of london.
Employment levels in the uks 8.5tn investment industry remained broadly unchanged year on year in 2019, as groups awaited clarity on the countrys approach to brexit, according to data from the investment association, a trade body.
By contrast, the number of people working in asset management in europes main cross-border fund hub, luxembourg, increased 5 per cent during the same period, figures from the countrys financial regulator show.
Since 2016, when the uk voted to leave the eu, the number of fund employees in london has increased just 6 per cent compared with 31 per cent in luxembourg.
The political drama over brexit last year led to some hiring paralysis and caused groups to pause their plans, said one london-based headhunter.
Employing close to 40,000 people, the uk investment management market remains the largest in europe in absolute terms.
The number of people working in fund management companies in luxembourg stood at almost 6,000 at the end of 2019, the local regulator said. when all fund depositary and transfer agent roles are included, this figure rises to 16,000,according to alfi, the luxembourg asset management association.
The divergence in hiring momentum in different jurisdictions underlines the extent to which brexit has forced asset managers to divert resources from london. since the 2016 referendum, many uk fund houses have either set up eu entities or boosted existing outposts in a bid to continue to serve european investors after brexit, with luxembourg and ireland winning the most business.
The irish fund industrys total workforce, which includes investment and fund servicing roles, expanded by 12 per cent between 2016 and 2018, while investment jobs in france rose by 9 per cent. the data for ireland and france, which was compiled by trade body irish funds and the french financial regulator, respectively, has not yet been updated to the end of 2019.
The drop-off in recruitment in the uk comes amid renewed uncertainty for the city as eu trade negotiations go down to the wire, increasing the possibility that the brexit transition period will end with no agreement in place.
With no deal yet agreed, there is alikelihood of further moves over the coming months as firms execute the final elements of their plans, said simon turner, uk wealth and asset management partner at ey.
In addition, the prospect of a tightening in eu rules on outsourcing in asset management as recently recommended by europes top markets regulator could lead to further job relocations.
Despite this, eys mr turner said the uks overall leadership position in asset management was unlikely to change.
Marc-andr bechet, deputy director-general of the luxembourg asset management trade body, said changes to the so-called asset management delegation model could further exacerbate the slow and continuous erosion in uk fund jobs over a long period.
Elsewhere about 16,000 people work in irelands investment management sector, which includes fund servicing and asset management jobs, said trade body irish funds. frances fund sector employs almost 18,000, while in germany the figure stands at about 16,000, according to trade body bvi.