Navigating Recruitment Challenges: The UK in Recession? And the Role of Contract Workers in Banking and Financial Services

The United Kingdom finds itself at the precipice of economic uncertainty, as indicators point towards an impending recession. As the nation braces for the impact, the ripple effects extend far beyond fluctuating stock markets and GDP figures, permeating deeply into the employment landscape. Nowhere is this more apparent than in the banking and financial services sector, a pivotal cornerstone of the UK economy. With traditional hiring strategies being re-assessed as financial institutions grapple with the need for agility and cost-effectiveness. 

This article explores the anticipated impacts of the recession on recruitment within these sectors and delves into how the strategic use of contract workers, considering factors like IR35 and options for day rate contractors or temporary contracts, might offer a viable solution .

The Recession’s Impact on Recruitment in Banking and Financial Services:

Historically, the financial industry has been both resilient and reactive to economic downturns. Financial institutions, typically known for their robust hiring practices, are now compelled to reassess their hiring strategies. A climate of uncertainty prompts a cautious approach, impacting the volume and nature of recruitment within these sectors. New to Market companies not only have the challenge of attracting the right talent to meet their business needs but are also facing the reluctance of lenders to provide additional investment to help facilitate growth. Whereas more established companies in the Financial services market are needing to restructure quickly to meet ever changing market conditions, which can include the temporary restructuring of departments on a temporary basis coupled with the additional

As companies of all size, from new-to-market start-ups through to the main stay High Street banks aim to weather the storm, traditional permanent hires may take a back seat to more agile, cost-effective solutions.

Contract Workers as a Strategic Solution:

In the face of economic uncertainties, the strategic use of contract workers emerges as a solution with considerable advantages. Contract workers provide companies with flexibility, allowing them to respond dynamically to fluctuating demand. This flexibility is particularly crucial in times of recession, where predicting long-term workforce needs can be challenging. Moreover, contract workers offer financial institutions the ability to maintain operational efficiency without committing to the long-term costs associated with permanent hires, especially in markets where there is a reluctance to leave established roles.

Benefits of using Contract Employees

  • Cost Savings: 58% of companies use contractors to reduce labor costs (Source: PwC).
  • Productivity, Flexibility & Expertise: The use of contract workers has always been associated with higher productivity levels among regular employees, possibly due to the specialist skills brought in by contractors. Contractors provide businesses with flexibility, allowing them to scale their workforce up or down as needed. McKinsey reports that 37% of organisations use contractors to save time on recruitment processes, and over 40% of organisation use contract workers for specialised skills and experience, especially when combined with project-based work efficiency..
  • Access to a Larger Geographical Talent Pool: The ability to tap into an extended geographical talent pool to meet specific project needs is a significant advantage.
  • Reduced Liability and Adaptability to Market Changes:     Employing contractors can reduce certain liabilities associated with full-time employees, such as healthcare costs and retirement benefits. The ability to quickly adjust the workforce size in response to market changes is crucial especially in times of recession and post recession recovery – 61% of hiring managers agree that the flexibility of the contract workforce helps them remain agile (Source: UpWorks).

IR35 Considerations:

The implementation of IR35, designed to ensure that contractors are paying the correct amount of tax, adds a layer of complexity to the use of contract workers. Financial institutions must navigate the intricacies of IR35 compliance to avoid legal and financial repercussions. While the legislation primarily affects the taxation of contractors, its implications for recruitment strategies are undeniable. Companies need to carefully assess their workforce structure, distinguishing between genuine contractors and disguised employees to ensure compliance with IR35.

Options for Day Rate Contractors or Temporary Contracts:

Within the realm of contract workers, financial institutions have the option to engage professionals through day rate contracts or temporary contracts. Day rate contractors, paid a predetermined daily rate for their services, offer a transparent and straightforward arrangement. This option is ideal for projects with well-defined scopes and timelines, providing both parties with clarity on expectations.

Temporary contracts, on the other hand, offer a more extended commitment, often spanning several months. This option is suitable for roles that require a more sustained presence, providing organizations with the flexibility to adjust their workforce according to evolving needs while maintaining a certain level of stability.

As the UK faces the challenges of a recession in 2024, the banking and financial services sector must adapt its recruitment strategies to navigate the uncertain economic landscape. The strategic use of contract workers, with careful consideration of IR35 and the options for day rate contractors or temporary contracts, emerges as a viable solution. By embracing flexibility and agility, financial institutions can not only weather the storm but position themselves for resilience and growth in the post-recession era.

Campbell & Fletcher Recruitment are the UK’s premier independent Finance and Banking professionals recruiters committed to connecting you with top-tier talent. We have operated a hugely successfull contract division designed to elevate your workforce strategy for over 10 years. We have the experience, processes and contractors ready to meet any contract requirement needs.

Contract hires provided and managed by Campbell & Fletcher Recruitment allow you to harness the power of flexibility as we can seamlessly provide skilled financial services, banking, risk and compliance professionals on a project or fixed term contact basis. Our contract specialists provide a cost-effective solution, with relevant industry knowledge and the agility to adapt to market demands, ensuring your team is equipped for success in a dynamic and ever-changing market.

We have the infrastructure in place for both clients and candidates and a pool of quality contract candidates across a number of disciplines.  For any initial questions or requirements give Alison Campbell a call on 07903 018136 or email her at