City to lose 62,000 jobs in two years

The City of London will lose 62,000 jobs by the end of 2009, wiping out all the growth of the last 10 years, a firm of economic consultants predicts.

Employment in London's financial district will fall by 28,000 this year, with a further 34,000 to go in 2009 as a result of the credit crunch, the Centre for Economics and Business Research (CEBR) said. The slump would take the City back to levels last seen in 1998.

The worst-hit sector will be corp-orate finance, which is set to lose half of its 15,000 employees because of a slump in demand for advice on mergers and acquisitions and leveraged buyouts. Derivatives will also be hit hard, with 46 per cent of employees losing their jobs.

City jobs reached a peak of 353,000 in 2007 after years of boom driven by cheap credit. Cutbacks will not be limited to banking, with legal and professional services, insurance and fund management all set to cut headcount by 10-20 per cent.

CEBR said the chances of a quick bounceback were slim, predicting a rise from 291,000 in 2009 to only 308,000 by 2012.

Richard Snook, senior economist at CEBR, said: "We expect the City to be hit hard by the crisis; we expect it to be set back by a decade."