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Recruitment set to hit record level

Firms predict that profitability will rise, fuelling demand for new staff.

Firms predict that profitability will rise, fuelling demand for new staff.

Recruitment by financial services firms is expected to continue at record rates in 2007.

A survey by PricewaterhouseCoopers and the Confederation of British Industry found that employment grew at a record rate of 55 per cent in the final quarter of 2006 compared with just 8 per cent in September.

As a result of this, staff costs as a proportion of total costs increased to 30 per cent and are expected to increase further this year. A high of 30 per cent was last seen in June 2004.

This comes despite corporate profitability remaining largely flat for the last two quarters but firms are predicting that profitability will increase in the first quarter, which will help fuel demand for new recruits.

Sixty per cent of financial services firms say they expect to spend more on regulatory compliance in the year ahead compared with 7 per cent, who plan to spend less.

Fund managers expect profitability to reduce next quarter but are continuing to vigorously increase staff levels and pour more investment into IT systems.

PWC UK investment management leader Pars Purewal says: “The impact of Mifid will be substantial and fund management houses are expecting staffing costs to increase significantly as a result.”

CBI head of economic analysis Doug Godden says: “These results mark a return to form for the financial sector which, apart from the summer’s lull, has delivered strong growth for over a year.

“Although confidence is little changed, the commitment to hiring more staff and the expected increases in volumes and profitability all bode well for the first quarter of 2007. Financial companies are now much more upbeat about their investment plans for the year ahead, which is encouraging.”

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