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The City of London is being forced to shed jobs against a backdrop of depressed trading, says the Centre for Economics and Business Research. Photograph: PA
The City of London is being forced to shed jobs against a backdrop of depressed trading, says the Centre for Economics and Business Research. Photograph: PA

City of London jobs expected to slump to 20-year low

This article is more than 11 years old
Number of people employed in London's financial sector likely to fall next year as economic woes bite, warns thinktank

City job numbers are expected to fall to their lowest level in two decades next year as banks and investment houses continue to make deep cuts to ailing operations, according to a study.

The number of people employed in the financial sector in London, excluding most accountants and lawyers, has already sunk below 250,000 this year, 11% down from last year. It was more than 350,000 before the financial crisis struck.

The Centre for Economics and Business Research (CEBR) suggests the City is being forced to shed jobs against a backdrop of depressed trading in currencies, gilts and equities, as well as a sustained drought in corporate mergers and acquisitions. The thinktank predicts the tally will fall again next year, to 237,036, before stabilising. The last time the City employed that few financial workers was 1993.

Kevin Burrowes, a UK financial services expert at PricewaterhouseCooper, said the sector was going through a painful shift to a "new equilibrium". He said pressures including new capital requirements and stricter regulations meant further cuts were to be expected.

"All of our clients are re-evaluating this [job cuts] almost on a monthly basis," said Burrowes. "Many of the banks still need to go through major change … I think the only conclusion you can really reach is that there will be further job cuts, particularly in investment banking."

Last month PwC's joint survey of the finance industry, in conjunction with the CBI, found 60% of banks reporting lower headcount for the three months to the end of September.

Last week UBS announced up to 3,000 posts would go at its London offices, part of a wider cull of 10,000 staff. Credit Suisse and Deutsche Bank have also announced job cuts, while Barclays and Societe Generale have indicated the are looking at shrinking their respective investment banking operations.

The CEBR chief executive, Douglas McWilliams, said: "The fall in activity is partly a function of the weak economy, partly a hangover effect from the financial crisis and partly caused by increasing regulation which limits access to bank cash to bankroll financial transactions. The business model for many firms in the City, which was based on taking a percentage from yields of 8% plus, has to change in a world where low yields are likely for many years to come." Meanwhile, job vacancies in financial services in the UK dropped by 24% for the three months to the end of September compared with a year ago, according to eFinancialCareers. The careers website said there were double-digit falls around the world, with declines in Australia reaching 34%. In the US the drop was 18%.

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