Two of the UK’s largest listed recruitment groups have warned that global political uncertainty from Brexit, Hong Kong protests and US-China trade friction will hit profitability this year.

PageGroup downgraded its profit outlook, while rival Robert Walters said its full-year profits would be flat compared with last year. Shares in the two companies were down 10 per cent and 8 per cent respectively by mid-morning.

UK-listed recruiters have expanded aggressively overseas in recent years but a downturn in a number of markets is putting pressure on profits.

PageGroup, which is part of the FTSE 250, said its 2019 earnings would be between 4 per cent and 10 per cent lower than City estimates, after fee growth slowed in its third quarter.

Operating profit is now forecast to be between ￡140m and ￡150m, compared with a previous consensus of ￡156m. In July, PageGroup warned it expected profits this year to be at the lower end of expectations. Before that analysts had expected a figure of as much as ￡168m.

“The majority of the group’s regions were impacted by increased macroeconomic and political uncertainty” in the three months to September, PageGroup’s chief executive Steve Ingham said. This “deterioration in trading conditions” was set to continue, he added.

Both companies reported a particularly sharp decline in the UK market.

UK revenues fell 4 per cent year-on-year at PageGroup and 11 per cent at Robert Walters. With less than a month before the deadline for the UK to leave the EU, confidence was weak among candidates and employers — although IT professionals continued to be in demand and there was growth in some areas outside London, according to Robert Walters.

The problems extend beyond Britain, however. Revenues for PageGroup’s Asia-Pacific region fell 8 per cent once the effect of currency fluctuations was stripped out, while at Robert Walters they rose just 3 per cent.

“The ongoing uncertainty surrounding Brexit, the US-China trade tariff stand-off and Hong Kong protests, coupled with the significant impact of the gilets jaunes protests experienced earlier this year have combined to create a unique set of cumulative headwinds,” said chief executive Robert Walters of his company’s performance.

Analysts at RBC remained positive about PageGroup, however. “Clearly trading is tough — no real surprise given the weaker [macroeconomic] and employment data of late,” said Andrew Brooke at RBC Capital Markets. However he added that the group was “well placed for the longer-term given its geographic diversity and mix. It should be the biggest beneficiary of wage inflation and skills shortages over time.”

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