While City jobs continue their long term dissipation into the ether of early retirement, some front office jobs are holding firm. Collateral management, for example, remains hot. So, according to the CEBR, do jobs in technology M&A and private equity. We also understand that both banks and hedge funds are in pursuit of economists.
“Demand for economists has been a trend ever since 2008,” says Chris Apostolou, a former economist who’s now MD at Arbitrage Search and Selection. “Before the crisis people thought far less about the macro economic implications of their investments than they do now.”
“Recruitment of economists is still steady,” agrees Natalie Basiratpour, an associate director at recruitment firm Selby Jennings. “People with central banking experience are being hired by investment banks and hedge funds – both as economists and into strategy roles.”
Bank of England economists are considered more desirable than former economists from the Treasury. Apostolou says the Bank is seen as more research-oriented and its staff more mathematical. The Bank of England recruits around 50 graduate trainees per year. Does it have a retention problem? Apparently not: staff turnover last year was only 4.7%, a spokeswoman tells us.
Nevertheless, there are plenty of ex-Bank economists in the private sector. Michael Grady, who joined hedge fund Comac Capital as senior economist in July, was previously the private secretary to the deputy governor of the Bank of England. Albert Edward, the famously bearish investment strategist at SocGen, began his career at the Bank of England in 1983. Seven of HSBC’s global economists have some kind of central bank experience.
In the era of quantitative easing, familiarity with the working of central banks is evidently advantageous. Julian Jessop, chief global economist at Capital Economics, says economists’ star has also risen as asset classes have become more correlated. “Equities, currencies and bonds are all being driven by the global macro economic backdrop,” says Jessop. “Ever since the financial crisis, there aren’t the differences between assets that there used to be.”
Apostolou says equities-focused brokerage houses are hiring economists more enthusiastically than previously. Exane, for example, recently hired Astrid Schilo, chief European economist at HSBC. The niche role of inflation forecasting has become more popular: hedge funds are said to be hiring ex-central bank economists with inflation-modelling expertise on packages of up to $1.5m.
For the most part, however, economists remain comparatively sedate individuals who command impressive but not astounding packages. At the junior end, Basiratpour says they can earn a £45-55k starting salary (even with a PhD), plus a 100% bonus. Senior global economists managing large teams of people might get £600k. Remaining economists are typically on £200k, or £300k max.
Apostolou says economists tend to be a different breed to salespeople and traders. “Traders will often move on every few years, but economists will stay with the same employer for a long time. There isn’t a hire and fire culture for economists,” he says. As banks continue to make redundancies across all business areas, this surely counts for a lot.
Meanwhile, Jessop says it’s not just banks and hedge funds that are hiring economists – independent research firms like Capital Economics are also expanding. “We’ve been hiring steadily and how have more than 40 economists who work for us,” he says. “We have a graduate recruitment scheme and will also hire from other consultancies, the Treasury and the Bank of England.”
Suddenly, it’s not M&A bankers or structured credit professionals who command the greatest cachet: it’s anyone who’s spent time on Lombard Street, at the ECB in Frankfurt, the IMF, or other central banking organisations with a front row seat on the global monetary system.