99,000 City jobs lost during recession

Much of the jobs cull happened in the last six months, says Cebr

New Statesman
Unemployed young people stand in line outside a job centre in central London. Credit: Getty Images.

The average number of City jobs for 2012 is likely to be down to 255,000 compared with an estimate of 288,000 made in December 2011 as much of the jobs cull happened during last six months, according to the latest estimates from the Centre for Economics and Business Research (Cebr).

The number of city jobs last fell to 255,000 in first quarter of 1996.

Cebr say the additional fall reflects the impact of the Euro crisis on the banks which has fed through to a second credit crunch and then into the financial markets. This is despite the impact of the increased lending by the European Central Bank (ECB) through the longer term refinancing option (LTRO) since December 2011.

The economics consultancy cautiously estimates that the position may be starting to stabilize as a result of the action by the ECB, with a modest recovery forecast for the period from 2013-2016.

By 2016, Cebr forecasts that the number of city jobs may have recovered to 268,000.

Douglas McWilliams, chief executive of Cebr, said:

The new data we have on jobs shows how the financial crisis is hitting the city. The combination of weak demand, aggressive regulation, high taxation and the rising competitiveness of financial centres in the Far East mean that London’s position is weaker than before. London remains the top ranked financial centre but its lead has narrowed.

One of the consequences is that the tax revenues from the city - which did so much to finance UK public spending in the boom years – are greatly diminished and likely to stay that way.

City-type jobs are defined as jobs in the wholesale financial service sector in the whole of London. It includes jobs in areas like Canary Wharf and excludes jobs in the City that are not in the wholesale financial services sector (though some lawyers and accountants who work exclusively on City deals are included).

In other research released today, Cebr notes that unemployment is set to continue rising over the next five years in every region of the UK except for the South East, East of England and London.