I hope you had a good summer. I am not naturally an autumn or winter person, although the run-up to Christmas is often the busiest period of the year. It can also be one of the most active times for hiring!

We continue to live through unusual times. Before 2020, I would have said our national pastimes were football and cricket, and for most of us they still are. For politicians, however, expectation management and kite flying seem to have taken over. We all know the UK has a large national debt and that many public services are under-resourced. However, shaping tax policy through the media isn’t helping anyone. The private sector also feels close to the limit of what it can absorb without damaging both growth and, ultimately, the public finances. Being Chancellor is never easy, yet the country needs a sense of optimism and direction.

We speak to a wide range of firms, usually those hiring, but we also keep in touch when they are not. Only a handful have mentioned National Insurance as a major concern. The NI changes have had a negative effect on hiring, although it is not the number one issue for clients.

I was asked recently if artificial intelligence has affected graduate recruitment. We’re not graduate recruiters, although we often discuss this topic with clients. The real barrier appears to be a lack of growth and a poor investment-to-reward ratio. Hiring a graduate is not cost-effective for many firms and it can take years before they see a return. The bigger challenges for the financial services industry remain a lack of growth, political uncertainty, and limited pricing power. Many clients cannot pass on their costs in the way a retailer can, yet their own suppliers continue to raise prices. With capital able to move freely, I feel the trend of funds looking to relocate parts of their operations to markets that appear more dynamic will continue, with the Middle East being the main beneficiary.

This lack of growth is not unique to the UK. PageGroup recently reported fees down 16 per cent in France and 14 per cent in the Netherlands, roughly in line with the UK. Robert Walters reported a fall of 5 per cent in the UK compared with 23 per cent across the rest of Europe. It is of little comfort to those looking for work. Graduates are finding it tough and senior candidates are also facing a more selective market. Firms are taking the opportunity to replace senior staff with more junior hires, a trend that is often called “juniorisation”. There are positives, as it gives developing professionals a chance to learn in quieter markets, although it can also mean experience is lost.

The hiring market overall remains subdued. There are many candidates available, yet firms still struggle to find the right people when they need them. Advertising is not producing the quality required at salary levels they expect. There is a clear mismatch between supply and demand. When one firm looks to hire at a certain level, others often do the same. Roles in the £45,000 to £80,000 range are functioning quite well from a candidate perspective. Below or above that range, vacancies are thinner and competition for top talent is intense.

Another common theme is demand planning. Many firms tell us they are extremely busy one month and quiet the next. Post-COVID, it seems to have become harder to predict workloads. It has led to a greater use of fixed-term contractors, often to deal with regulatory projects, to cover sudden absences, or to remove operational bottlenecks.

For me, the path to normality and greater confidence is likely to come through lower interest rates. Inflation needed to be tackled firmly (perhaps firmer than the BOE did initially), although the focus now should be on creating the conditions for growth. Lower rates would encourage investment, building projects, and house purchases, all of which feed back into financial services.

In Fram news, Beate, my wife and colleague, completed her second parachute jump this month. We are also hosting a webinar with Ocorian (thank you Abi) on The Boardroom Under the Microscope – Governance Risks in Alternative Investments. Details are available on our website for those who would like to join us.

It has been a challenging period for many, yet as rates ease and confidence returns, activity should gradually pick up. I hope the coming months bring a more settled environment for firms and candidates alike.