Technology and cutbacks to cost City 12,000 jobs

Around 12,000 City jobs could be lost in the next two years as new technology and cost-cutting programmes sweep the UK's financial centre, according to a report published yesterday.

Around 12,000 City jobs could be lost in the next two years as new technology and cost-cutting programmes sweep the UK's financial centre, according to a report published yesterday.

But, the reports adds, the jobs downturn in the Square Mile will be short-lived and employment will pick up strongly in the new millennium.

Research from the Centre for Economics and Business Research (CEBR) suggests London's Square Mile is set to suffer from the growth in Internet use and cost-cutting as more financial groups succumb to takeovers and mergers.

The report warns that the growing use of the Net in the financial sector means businesses no longer need to be located in the capital.

Recent mergers such as the Lloyds TSB-Scottish Widows takeover and the Bank of Scotland's bid for NatWest - if it goes ahead - would result in major job losses, especially in London and the South-east.

Employment in the City could also shrink as the need for expert investors declines with the rise of "passive" funds, where investments automatically track indicators such as the FTSE 100.

But the CEBR predicted around 79,000 jobs could be created between 2002 and 2015, boosted by preparations for the potential introduction of the euro and a further acceleration of European acquisitions.