Brexit, Luxembourg and staffing update

Now that Brexit negotiations are (theoretically at least) in full flow and following the continuing announcements of financial business looking to either establish or scale existing operations in Luxembourg, it seems timely to discuss our view on the impact of Brexit on staffing in Luxembourg. There has been less clarity around what Brexit means for the financial sector than ideally would have been the case, and there really is no time to waste to mitigate the associated risks.

What is the impact so far?

2017 was a busy year for Luxembourg on all levels, and the non-more so than for the Luxembourg staffing arena. Brexit was on everyone’s mind, but most of our 2017 projects were linked to the result of continuing economic development and the strength of the Luxembourg brand in the global financial market. With hindsight we were certainly witnessing the beginning of a “Brexit bubble”, similar in characteristics to the impact that the implementation of AIFMD and the change in IP laws had in the recent past. As we approach the summer, Greenfield is witnessing a surge in Brexit related projects across traditional asset management, alternative funds, corporate service providers and legal firms. We expect this “bubble” to continue at least until the end of the year, and the resultant increasing growth in interest in Luxembourg should mean that the current accelerated levels of hiring will become the “new norm”.

What will the future bring?

In July 2017 I asked Jens Hoellermann of Intabulis, a leading provider of independent directorships to the financial industry, what his predictions for the Brexit effect on Luxembourg were, he commented: “According to media coverage, US private equity funds Blackstone and Carlyle Group are establishing passporting rights in Luxembourg to be able to do business in the European Union after Brexit. These moves are most likely less about moving people but more to secure doing business going forward, the right to market and distribute funds, as under current regulation, funds from outside the European Union are required to register separately in each country where they want to market. Other asset managers like Swedish EQT have also made the decision to launch any future funds in Luxembourg. There are also rumours of many others that shall have chosen Luxembourg already. And when the big ones move, the small and medium players will follow. A partner of a well-known Luxembourgish law firm recently commented that the alternative industry in the grand duchy will grow by 10 times within the next five years. Although all such PE houses already have some staff in Luxembourg, they all might need to hire more people to cope with the increased workload of managing funds. The same applies to all kinds of service providers, like law firms, administrative and depositary agents and the Big Four. However, asset managers are to be considered being at the top of the food chain, which potentially could lead to problems for the service sector. Although Luxembourg has a good talent pool, the increased demand for knowledge and experience might not be covered easily. In addition to the PE industry moving to Luxembourg, a few London-based insurance firms and financial technology companies have announced relocating to the grand duchy as well.” If you have been reading the business press, you will see that his predictions are coming true!

More diverse roles?

The many remaining questions surrounding Brexit, especially around the free movement of labour and financial passporting, clearly have implications for the Luxembourg recruitment market. During 2017 we were involved in the recruitment of several front-office roles for asset managers where the roles previously would have been based in the UK and are currently involved in four specifically Brexit-related projects for asset managers establishing their first European operations – all have commented that a few years ago the UK would have been the preferred destination. We are also working with seven UK headquartered firms expanding into the EU. In other areas of financial services (for example the delivery of middle and back office functions) the situation is still a little unclear. Branches and subsidiaries of large multinational (“non-UK”) banks are making provisions which appear to entail expanding existing operations in designated centres, however given the strength of our local market infrastructure there is no reason why Luxembourg can’t compete on this front too in the future.

Will there be salary inflation?

In the run-up to the 2008 financial crisis wage inflation was a serious issue in Luxembourg. Thankfully with reasonable inflation, and periodic wage indexations, we have not seen salaries spiral over recent years. Whilst there is always the prospect of wage inflation in markets where professional resources are scarce this has not demonstrated itself yet. Although the unemployment rate is currently low (circa 5.7%) due to an increase in resident employment, the actual population of Luxembourg is growing in line with employment demand (current population is 602,000 people). Hopefully salaries will continue to increase in line with inflation and not based upon other dynamics. Indeed, rather than wage inflation, Brexit could well spur an increase in population as the financial industry grows. This would act as a stabilising factor for employment costs in Luxembourg, which in turn would also maintain Luxembourg as an attractive place to do business from.

Brexit is an opportunity for us all

In conclusion, Brexit is an amazing opportunity for Luxembourg and whilst it is undoubtedly presenting challenges for staffing and resourcing, Brexit has led to an increase in activity in the recruitment market and the provision of exciting opportunities and career development for those active in the financial sector. This article was written by Christopher Purdy, managing director, and Courtney Charlton, executive search director. For more information about Brexit and Greenfield please contact

(This article was originally published on Paperjam, 1st June 2018)