Job vacancies in London’s financial services sector fell by 17% in the third quarter compared to the same period last year, according to recruitment firm Morgan McKinley.

The decline has been attributed to factors such as war, inflation, and the lasting effects of Britain's exit from the European Union, the firm reported on Monday.

Mark Astbury, an associate director at Morgan McKinley, indicated that hiring activity is expected to remain muted in the near term, particularly with the upcoming Labour government budget announcement on October 30—the first since its election in July—and the U.S. presidential election on November 5.

"Firms are being cautious, scaling back on aggressive recruitment efforts, and instead focusing on strategic hires due to ongoing post-Brexit adjustments, inflationary pressures, and broader economic uncertainty," Astbury explained.

Despite the annual drop, the data showed a 7% increase in job vacancies in the third quarter compared to the previous quarter. Astbury noted that this uptick was driven by demand for talent in areas such as regulatory compliance, digital transformation, and environmental, social, and governance (ESG) initiatives.

The impact of Brexit on London's financial hub has been significant, with the city losing approximately 40,000 jobs as a direct result of the UK’s departure from the EU, according to the Lord Mayor of the City of London in a statement to Reuters last week. This loss is more substantial than earlier estimates had suggested. Photo by Phil Whitehouse, Wikimedia commons.