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City 'to lose 6,500 jobs' in 2008 City 'to lose 6,500 jobs' in 2008
(1 day later)
The City of London could lose 6,500 jobs in 2008 in the wake of market turmoil, the Centre for Economics and Business Research (CEBR) predicts.The City of London could lose 6,500 jobs in 2008 in the wake of market turmoil, the Centre for Economics and Business Research (CEBR) predicts.
The bulk of cuts are expected in sectors that have seen rapid expansion in recent years, including at private equity firms and hedge funds. But this figure is significantly lower than the 11,000 jobs created in the City this year.
Investment banking is set to see the most cuts, losing 2,300 positions. Many of the cuts are expected in areas such as private equity, which have been brought to a virtual standstill by the credit crunch.
Financial markets worldwide have seen turmoil since the summer, causing fears of a wider economic slowdown. Private equity deals rely on firms being able to borrow large amounts.
The summer credit crunch has made banks much more reluctant to lend the money needed to make big takeovers.
'Breakneck speed''Breakneck speed'
Sarah Bloomfield, one of the report's writers said: "What we are likely to see as we enter 2008 is a reduction of almost one for every two jobs added this year." The CEBR predicts that investment banking will see the most cuts, losing 2,300 positions.
Sarah Bloomfield, one of the report's writers, said: "What we are likely to see as we enter 2008 is a reduction of almost one for every two jobs added this year."
"But although this equates to a reduction in total jobs of only 2%, it will feel worse than it actually is because the City has become used to adding jobs at breakneck speed.""But although this equates to a reduction in total jobs of only 2%, it will feel worse than it actually is because the City has become used to adding jobs at breakneck speed."
The report says 11,000 jobs were created in 2007, considerably more than the 4,000 originally forecast.The report says 11,000 jobs were created in 2007, considerably more than the 4,000 originally forecast.
This job creation figure was revised upwards "because of extraordinary growth of the City up to the summer" taking jobs to a record high of 349,100 in 2007, said the CEBR.This job creation figure was revised upwards "because of extraordinary growth of the City up to the summer" taking jobs to a record high of 349,100 in 2007, said the CEBR.
Finance sectors tipped to see losses include the derivatives and foreign exchange industries - which are forecast to forfeit 700 jobs.
And a further 600 positions are expected to be cut in the insurance sector.
But the centre suggested the job losses would be temporary, lasting until 2009.But the centre suggested the job losses would be temporary, lasting until 2009.
"However jobs will fail to return to record-settling levels until 2010 when the likes of China will return to the positive side of their economic cycle," it said."However jobs will fail to return to record-settling levels until 2010 when the likes of China will return to the positive side of their economic cycle," it said.