Worried businesses rushing to protect themselves against the potentially cataclysmic collapse of the euro helped trigger a surprise rush to hire in the Square Mile last month, figures showed today.
The City jobs market had its best month since August last year as it created 4,320 posts in May – a 25 per cent rise on the previous month, says financial services recruiter Astbury Marsden.
The biggest surge in the jobs market is coming in foreign exchange and interest rate swaps on worries over Spain's struggling banking system as well as the potential impact of a sudden pull-out of the single currency by Greece. Most of London's biggest investment banks, including Barclays Capital and Royal Bank of Scotland, are thought to be adding staff.
The upturn in activity comes as as the single currency drops to its lowest level against the dollar for almost two years. Mark Cameron, Astbury Marsden's chief operating officer, said: "Volumes within these areas seem to have picked up over the year. The threat to the euro is now seen as a risk that businesses need to consider hedging against. That has created a lot of activity. With institutional investors bearish about the euro, currency sales teams have certainly been earning their keep. That volatility has created income for the banks and brokers."
But Mr Cameron warned he was "not ready to break open the champagne" despite the unexpected recruitment burst. The number of jobs created in May was still far lower than the same month a year ago. According to the Centre for Economics and Business Research, there are 100,000 fewer workers in the City than in 2007.
He added: "This positive trend in banking recruitment could well continue into June. Beyond that, it would be foolhardy to predict which way the City jobs market could go because Europe's future is so uncertain."
His comments came as Panicos Demetriades, the head of Cyprus's central bank, warned that the nation may have to call on European aid to prop up its second-largest bank with €1.8bn (£1.5bn).
Cyprus , whose banks are heavily exposed to Greece, has until now borrowed funds from Russia. Mr Demetriades said in an interview: "It is hard to see where [the recapitalisation] is coming from, if not Europe."