London's City to Cut Thousands of Jobs
Thousands of London's financial professionals will lose their jobs over the next year as a result of the credit crunch, with many likely to face a jobless Christmas, experts say.
There will be 6,500 fewer professionals in the City of London financial hub in 2008 than this year, according to a report by Britain's Centre for Economics and Business Research(CEBR) due to be released on Monday.
About 2,000 City jobs will be slashed by Christmas off a record high of 349,100 registered this month, said the centre's senior economist Jonathan Said.
"What we are likely to see as we enter 2008 is a reduction of almost one for every two jobs added this year," one of the CEBR report's authors Sarah Bloomfield said in a statement.
"It will feel worse than it actually is because the City has become used to adding jobs at breakneck speed."
Private equity, mergers and acquisitions, hedge funds and structured finance units will shed the largest number of jobs, the centre said.
Swiss bank UBS AG said this week it would axe 1,500 jobs in its investment bank whose major centres are in London and New York. Credit Suisse also said it would let go of 170 employees in its investment banking unit.
"Clearly, there are going to be more job cuts, especially from the likes of Citi where we can expect the highest," said Shaun Springer, chief executive of London-based recruitment firm Napier Scott, in reference to Citigroup.
The largest U.S. bank by market value said on Monday it was expecting a fall of about 60% in third-quarter earnings.
But recruiters say the City will not suffer layoffs on a scale seen in the previous period of market volatility.
According to CEBR, more than 15,000 financial jobs were lost in London between 2001 and 2002.
"I don't think there is going to be a massive wave of job cuts," Springer said.
"The banks did that back in 2001 and 2002, and in 2003 they found themselves desperately short not only of the skilled staff necessary to effect expansion but similarly short of graduate juniors because they didn't take any of those either."
Rather, headcount will be reduced steadily over the year.
"5% get culled every year anyway. Whether they are going to be replaced, I doubt. Whether hiring is going to be as frenetic in 2008 as it was in 2005, '06 and '07, I doubt. There's always natural wastage also, will that be replaced? Perhaps not," Springer said.
The consequences of the cutbacks will vary.
On the one hand, "there'll be greater talent on the market for a short period of time and that might potentially ease certain organisations' war for talent," said Robert Thesiger, chief operating officer of recruitment firm Imprint.
But on the other hand, the banking industry risks losing some of its experienced workforce for good.
During the last market meltdown, Springer said, many City professionals were forced to move out and never returned.
"They didn't sit kicking their heels waiting for the recruitment market to recover. They went and did something else."