View from City Road: Less a bloodbath, more a blip

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The Independent Online
There are two things wrong with the array of shock headlines over the past few weeks predicting another City jobs bloodbath like the one that hit the markets in 1987. First, there was hardly a bloodbath then, and second, there is unlikely to be one now.

Employment in the banking industry in London rose from 161,000 in 1984 to 198,000 in 1987 and 206,000 in 1989, falling back only in the 1990s when banks began to prune their branches.

Following the 1987 crash, there were siren predictions of 50,000 job losses in the high-earning securities industry. This was odd indeed, since the industry employed at most a total of about 30,000 in 1984, dropping only a sixth to 25,000 by the end of 1987. By 1991 the number had risen to 35,000, according to data in a report to be published soon for the City Research Project.

The setback in 1987 was a result of over-investment before Big Bang in 1986. The doomsters got it so wrong because they worried about spectacular failures such as Citicorp's foray into securities and overlooked the way Japanese, French and American securities firms were staffing up.

The same thing looks likely to apply this time around. For example, Deutsche Bank is planning a big new drive in the London securities markets, and many other Continental and Japanese firms feel under pressure to build up their bond and derivatives activities. There are also still some heady prices being paid out there for the right people. At worst, this looks like being just another blip in the City jobs market.