The sluggishness of Brexit means London monetary staff are going through a onset of summer season

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LONDON (Reuters) – The weeks leading up to Easter are usually the busiest of the year for bankers, lawyers and advisers in the City of London, with customers rushing to do business before the holidays.

FILE PHOTO: Workers come out of the Bank underground station with the Bank of England (L) and Royal Exchange (R) buildings in the financial district of the City of London, London, UK, January 25, 2018. REUTERS / Toby Melville / File Photo

But comparatively little has happened this year.

City workers had hoped that the first quarter would freeze if Britain left the European Union on March 29 or April 12.

However, with Brexit on hold until October 31 and the terms yet to be agreed for the exit, fears are growing that this could be one of the leanest years for the city since the aftermath of the 2008 financial crisis.

The London Stock Exchange has only had a corporate listing of more than £ 75 million ($ 97.61 million) so far this year. Trading volume on the London Stock Exchange was a third lower in February and March than a year ago and the lowest since August 2016.

According to a Reuters analysis of the Refinitiv data, the average daily turnover of the London blue-chip share index FTSE 100 fell more sharply in these two months than on all major stock exchanges in Europe with the exception of the DAX 30.

European investment banking fees – most of which are earned in London – fell 25 percent in the first quarter, according to Refinitiv. And only 11 new UK-based hedge funds were launched in the first quarter, compared to 35 in the same quarter of 2018, data from Prequin shows.

“There will be a long pause. Investors need to see something much more positive in politics to be persuaded to move again, ”Alastair Winter, economic advisor for Global Alliance Partners told Reuters.

“I can’t see how Labor and Conservatives can strike a deal. They play games to avoid being blamed. And until they find out, the city will just have to turn in the wind. “

Morgan McKinley’s latest London Employment Monitor, which tracks financial recruitment trends January through March, found vacancies and job seekers decreased 9 percent and 15 percent, respectively, from a year earlier. The number of vacancies and job seekers was half as high in the first quarter as in 2017.

Hakan Enver, executive director of Morgan McKinley, said the numbers showed employers’ confidence in the city is flat.

“Despite all the uncertainties of the past few years, there was always the assumption that we would have some answers on March 29th. But we’re still waiting here, ”said Enver.

Neil Robson, regulatory and compliance partner at law firm Katten Muchin Rosenman, said in the six weeks leading up to the end of March that the “paid” work he did was what he would normally be doing in a week and a half.

“People are not setting up new funds, not hiring, not firing, they are not doing new business because they are just waiting to see what happens with Brexit,” he told Reuters.

In contrast to the 2008 financial crisis, there is no sense of panic, just a pause until there is more clarity about Brexit and other global issues such as the US-China trade dispute.

“We didn’t see a panic sale. There is resilience and people have decided that they just have to watch this game, ”said a senior private banker.

Robson said he has seen a small pickup in activity since the Brexit extension was agreed, but it is still underutilized.

(Graphic: LSE sales – tmsnrt.rs/2IrwrGg)

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The slowdown has forced companies to be more creative with making money.

Several major investment banks, including JPMorgan and Goldman Sachs, have raised funds for private companies to fill an income gap created by shallow capital market activity. JPMorgan recently helped UK banking start-up Starling raise £ 75m to fund expansion.

Banks also spend more time taking companies off the market.

“I probably spend more time talking about takeaway options than I did a year ago. You will see more of it from now on. If ratings remain depressed, there will be more private individuals, ”said Indy Bhattacharyya, director at broker Peel Hunt.

The slowdown isn’t limited to London – US banks this week reported declines in their trading operations worldwide.

With the uncertainty surrounding Brexit baffling the issue, it is particularly tough for UK-based finance houses.

“The bigger players will survive this, with some cuts here and there. Where there will be carnage is among the small-cap brokers, the boutique operators, “said Winter.

The Canadian Canaccord Genuity Group blamed Brexit and regulatory pressure last month for unacceptable returns in the UK capital markets business and the start of a restructuring program that is expected to result in significant job cuts.

As part of that plan, the company has put 48 London jobs, more than a quarter of its city workforce, at risk of layoffs, according to an internal Reuters document. There are also plans to shut down the mining and investment trust business, two sources familiar with the situation.

Canaccord said in a statement that it is going through a consultation process and cannot confirm details about the employees concerned.

“This process is difficult, but it is related to our pre-determined strategy to better focus our business on the areas where we can be most relevant to our customers while limiting our exposure to areas that are more sensitive to them react to unpredictable market conditions. ”said the company.

Faced with the risk of potential cuts, bankers say they are holding back booking longer holidays and instead double down on meeting customers and developing ideas. But until there is more clarity about Brexit, few expect it to lead to a lot of new business.

“This year there is every chance that more bankers will do the school run,” said Bhattacharyya of Peel Hunt.

($ 1 = 0.7684 pounds)

Additional coverage from Helen Reid, Maiya Keidan, and Virginia Furness. Adaptation by Jane Merriman and Rachel Armstrong