FTAdviser.com

Advertising

In a bleak warning to London’s financial services sector, a CEBR report published yesterday estimates that the number of jobs in the industry may drop by 11,00 this year to 342,000 and drop a further 8,200 jobs in 2009 to 334,000.

The report continues with its gloomy forecast, warning that the slowdown will be so severe that employment levels may not return to 2007’s level until 2012.

Corporate finance, investment banking and derivatives sectors are expected to be most severely affected by the impact of the credit crunch.

Dominic Walley, CEBR senior economist, said: "The persistence of the credit crunch and magnitude of its impact on many key markets in the City has forced us to revise our forecasts for City jobs in 2008.

"We now expect 11,000 jobs to be shed this year, compared to our previous estimate of 7,000 job losses.

“Furthermore, the outlook for 2009 has deteriorated. There is little sign of light at the end of the tunnel for the City."

CEBR expects merger and acquisition activity to fall by 26 per cent in 2008 compared last year, while trading volumes on the London Stock Exchange will drop by 36 per cent.

The warning comes as research by Ernst & Young also revealed that profit warnings have reached their highest level since the dotcom boom in 2001. (Read full story here.)