British financial meltdown has sparked massive layoffs among Canadians, Americans in London's once-gilded City
London-The good old days are over for Canadians working in the City, the fabled London district that once gave Britain the world's most powerful international financial sector.
Tens of thousands of Canadians and Americans have for years been drawn to London to take jobs in banking, many of them working for the gilt-edged British operations of U.S. investment giants. But the appeal of the expatriate careers has been tarnished by the meltdown of the British banking industry as the recession that started on Wall Street 18 months ago spread around the globe. Estimates of jobs lost in London's financial businesses between 2007 and March 2009 run as high as 130,000.
"Yeah, and I think half of them are in my inbox," joked employee recruiter Josh Wright. "Every day you open the paper, it's doom and gloom," said Wright, a 25-year-old from Waterloo, Ont. "It's a completely different market than two or three years ago."
The grim job situation reflects an epic reversal of fortunes in the City. Fed by cheap debt, a housing bubble and freewheeling markets, bankers racked up dizzying profits and bonuses as financial companies led a giddy run-up of wealth during Britain's 15 years of steady economic growth. But no one's looking for sky-high payouts now.
"The bonus this year is that you kept your job. If you're working, you're grateful," said a young Toronto MBA graduate who asked not to be named. He himself has been looking for a full-time position since being laid off by a large finance company in London nine months ago.
"It's been an uphill struggle to find work. It's pretty bleak out there. And it's getting worse. In the last two weeks, I had four friends who lost their jobs."
It's not just the unravelling of big-name financial houses like Bear Stearns, Merrill Lynch and Lehman Brothers that has drained jobs from the City. Dozens of other shell-shocked British operations – as well as companies from continental Europe, Canada and the United States – have reduced their presence in London to cut costs, observers say. And a new survey by the Confederation of British Industry predicted another 15,000 jobs will disappear by summer.
In the boom years, banks were in such need of personnel they would take on employees with a minimum of training or skills. But now financial institutions can have their pick of highly qualified job seekers.
"Some think the worst is behind us but that doesn't mean that there won't be additional layoffs," said Ryan McGaw, 33. Many Canadians and Americans working in banking in Britain are young and their plans are changing as the lure of the City fades, the former New Brunswicker said. "Some people are thinking of travelling for six months, and, especially in the expat community, some people are just thinking of going home. "I knew someone who always wanted to move to Australia. So after he got laid off, he did."
The urgency of the job search is compounded by the cost of living in London, one of the world's most expensive cities. On top of that, working in the City has lost some of its traditional cachet. One senior executive saw his house vandalized and protesters tried to break into a downtown bank branch recently as the backlash against the financial community peaked.
With many Britons accusing financiers of wrecking their economy in an orgy of greed and risk-taking, bankers here have been appealing for an end to the "public flogging" of their industry. Until 2007, banking had been the driving force behind Britain's growth. But Russell Jones of RBC Capital Markets says the sector's economic potential has been reduced by a third in only 12 months.
The lucrative merger mania of recent years is over and investors have been spooked, said Jones, RBC's global head of fixed income and currency research. Referring to the risky securities that played a key role in the international crisis, Jones said, "For some of the more esoteric products which developed over the last couple of decades, some of those markets have just ceased to exist and London was at the forefront of them.
So it's a sector of the economy which is under acute duress." Looking ahead, British leaders wonder if the City will some day resume its former stature or whether major centres such as New York or Frankfurt will erode London's pre-eminence as a global financial hub.
"The financial world has changed beyond recognition over the past couple of years," said Richard Lambert, director general of the Confederation of British Industry. "No one knows quite how this story is going to end. But one thing we can be sure of: We are not going back any time soon to those balmy days of yesterday that ended with such a loud bang in the summer of 2007.
"Still, while the jobs picture may not be the same for expatriates after the slump, it will continue to have a strong appeal, said Wright, the financial services headhunter. "London's not going to die as a competitive city," he said. "It may take a while but it will come back."
