City Jobs Forecast Revised Down

Cebr downwardly revises forecasts for growth in the number of City jobs after latest round of announcements from large City firms.

The number of City jobs is forecast to rise by 9,600 this year and by only 2,700 in 2011 as firms freeze all new hiring.

These are the findings of the latest issue of London and the City prospects, a regular publication to be released to subscribers of The Prospects Service on Tuesday 5 October by the centre for economics and business research (cebr) — one of the country’s leading economic consultancies, renowned analysts of the London economy and the only commentators to both track the history and prepare forecasts for the number of City jobs.

In April this year, we projected that around 14,000 jobs would be added over the course of 2010. This figure has now been revised down to 9,600 due to reluctance on the part of major financial institutions to increase recruitment in the face of an uncertain regulatory future. Despite witnessing rising profits over the first half of the year, there is growing concern amongst the City’s top players that prospective regulation in addition to looming public spending cuts may dampen business expansion over the next few years. A proposed immigration cap and higher top rate of income tax also stand to weaken the City’s reputation as a lucrative destination for international finance.

Cebr estimates that the financial crisis cost 49,000 wholesale finance jobs over the course of 2008 and 2009 as firms put containment operations into effect. We expect that just over 12,000 jobs will be added in 2010 and 2011 as increased caution and a tighter regulatory regime combine to stifle growth in City employment. A sluggish recovery and a lower rate of job creation mean employment in the City will take time to return to pre‐recession levels. Looking forward our forecast for the medium term is that the City job numbers will gradually recover from 2010 and rise to 345,000 in 2015. This is short of the 354,000 we estimate worked in City type jobs at the peak of employment in 2007.

Scott Corfe, economist at cebr and the report’s lead author, commented:

‘We have revised down our forecasts of City job creation in the short‐term due to ongoing concerns about the future of the financial services sector in the UK.

Despite the Coalition government’s claim that Britain is “open for business”, London’s services sector is clearly concerned that stringent regulation, from a tighter immigration cap to higher taxes, could stifle its ability to expand over the coming years.’

Benjamin Williamson, senior economist at cebr, commented:

‘Both London and New York have seen their leads over other global financial centres decrease over the last three turbulent years, with the gradual shift in economic power from West to East having accelerated throughout the global financial crisis.

The City of London is in danger of becoming little more than a regional hub of international finance in the future as Shanghai and Singapore fill important banking roles for the rising economic superpowers.’

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