Market Update - May 24

Hello, and welcome to Absolute’s Finance and Accounting update. This month continues on a positive note as we see the UK lift itself out of recession, and inflation has come back down to 2.3%... the lowest figure in 3 years. All early signs that the market is picking back up. With a General Election on the horizon, it’ll be interesting to see how this announcement affects things in the next few weeks.

This, coupled with a surge of investment into the UK tech sector, we’re beginning to see an increase in demand for senior finance professionals with experience in M&A and investment readiness.

As more vacancies come to market, the gap between candidate expectations and the salaries employers are offering is noticeable, we’ll be discussing remuneration packages and benchmarking below.

Economy growth takes UK out of recession

The UK economy grew by 0.6% in the first three months of the year to take the country out of recession. Many are hoping that this is an early sign of the market returning to a normal growth rate and that the start of 2024 could give momentum to the economy throughout the year, generating more business and increasing consumer confidence.

Earlier in the month, Chancellor Jeremy Hunt said that the GDP figures are “proof that the economy is returning to full health.” While experts may disagree with his interpretation, there’s no denying that there has been growth so far this year and that the UK has the best forecast growth “among European G7 countries over the next six years.”

These positive signs that the market is slowly moving in the right direction are giving companies more confidence in hiring, particularly growth roles, with more projects and M&A on the horizon.

Naturally, many clients are still exercising caution, which is representative of more companies trying to reduce budgets by recruiting directly in the first place. That said, we’ve seen an increase in companies approaching us following unsuccessful or long-drawn-out searches by internal talent teams as companies struggle to attract the right candidates. Despite applications being at an all-time high, the feedback we’re receiving is that internal teams are struggling to align candidates' experience and expectations with the required skillset or culture fit. This is when specialist agencies can add real value using their networks and running a traditional headhunt project.

Disparity between client and candidate salary expectations

With the market picking back up, so too do old challenges. We’re repeatedly seeing a disconnect between the salaries employers want to pay and the expectations of candidates. Though hiring had slowed over the last 12 months, demand has always remained for skilled finance professionals, and thus, salaries have continued to grow steadily.

At the junior end of the market, we’ve noticed more Central London companies wanting to attract finance talent with a couple of years of experience, offering just over minimum wage. When you factor in travel costs to the city five days per week, which is already at an all-time high, it’s not difficult to see why these companies are struggling to attract the right calibre of candidates.? While we appreciate that some of these roles often come with additional benefits, such as study support and ongoing training/progression, low-balling salaries is putting a lot of junior professionals off.

It's a similar story in the mid-tier; we’ve had a few conversations recently with businesses that still think they can hire a newly qualified candidate for ￡50,000pa. While we know this is no longer the case, we’re finding all too often that the clients are doing little to no benchmarking to understand the current market rates. When asked why salaries are being put at the ￡50k mark, it was commonly because it’s what they’d paid previous candidates upon joining (up to 3 years ago) or what they had been paying the exiting employee (who is likely leaving for a pay rise).

Newly qualified salaries have considerably increased. ￡55,000 would be an absolute minimum, but more often than not, you’ll need to pay around ￡60,000 to remain competitive and some candidates coming out of the “big four” accountancy firms are achieving ￡65,000 in their first role in industry. This, in turn, is pushing salary expectations up for the mid-senior market in general, particularly for candidates with niche experience/ skillsets.

If you’d like to find out more about salary and benefit benchmarking, contact us. We can discuss your team structure and roles to ensure your remuneration packages are competitive. Behind the scenes we are also working hard on our 2024 salary guide, which we are designing to be much more informative than most we see from our competitors, anticipated to release in July – watch this space!

More investment into the UK tech space

This month has seen the UK’s tech scene receive a huge boost, with more than ￡2 billion invested by world-leading tech companies in the first week of May alone. With one of the strongest tech sectors in the world, third only to the USA and China, the UK tech market is attracting a lot of investment attention.

AI is a huge factor in this growth, with the UK accounting for more than half of all AI private capital investment in Europe. As we reported in last month’s update, we’re seeing more VC investment heading to new tech companies as the market begins to pick back up.

Other positive signs come from Marex and its successful IPO in the USA a couple of weeks ago, with this comes confidence that the IPO market is gaining pace. And though the UK is still massively down on IPOs compared to 2021-2022, there looks to be a few game-changers on the horizon, the highly published potential Shein IPO being one of them.

Naturally, the boom in investment will mean a surge in job vacancies, particularly for finance professionals with experience in supporting a business through investment, IPO and exit. We’ve already spoken to a few candidates who are in roles that are geared towards investment readiness, which is exciting to hear. Let’s hope this continues throughout the year and is a sign of things to come.

Thank you for taking the time to read our senior finance market update. As always, if you would like any advice on hiring, candidates, salary benchmarking or to discuss the market / your next role, book a 30-minute call here.