CBI says 8,000 City jobs will be lost by the end of 2011 as costs are cut

 
Tim Wallace
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THOUSANDS of jobs are expected to go in UK financial services as the sector looks to cut costs, according to a report out today from the Confederation of British Industry (CBI) and PwC.

Investment managers, insurers, banks and traders are all expected to cut jobs, the survey found, with the employment outlook only improving in building societies.

Back in May the survey showed a positive balance of five per cent of financial services firms with a positive employment outlook. A net total of 1000 jobs was created in the following quarter. Now that balance has dropped to -11 per cent.

“That is 8,000 out of around 900,000 working in the sector in the UK,” said the CBI’s Ian McCafferty. “Nonetheless, uncertainty about future demand and worries about shifting regulatory sands are weighing on sentiment.”

Indeed, the regulatory situation is adding to costs noticeably. “Of the jobs that will be created, many will come in the institutions’ compliance arms,” said PwC’s UK banking leader Andrew Gray, “although headcount in this area is still a small proportion of total costs.”

Larger costs will come as capital buffers are increased. However, the 2019 deadline set by Basel III and proposed in the Vickers’ Report mean this should be achievable without too much pain, the report found.