London’s financial firms to cut more jobs

Bloomberg

Banks and insurers in London may eliminate about 29,000 jobs this year, 9 percent of the total, before employment growth resumes in 2010, the CEBR said in a report yesterday. The estimated losses are lower than the firm’s October forecast of 34,000.

"The financial crisis has turned the corner," the CEBR said. "The bank recapitalization, asset protection scheme and sharp cut in interest rates have all helped to restore confidence in financial markets."

State guarantees
The government took control of Royal Bank of Scotland Group and Lloyds Banking Group this year, and extended state guarantees to cover the lenders’ riskiest assets in a bid to revive lending and growth. The economy shrank 1.6 percent in the fourth quarter, the most since 1980, and the Organization for Economic Cooperation and Development forecasts gross domestic product to drop 3.7 percent this year.

"We are beginning to see light at the end of the tunnel," CEBR senior economist Richard Snook said. "There will be further serious job losses as a result of the credit crunch, but we expect this to be a one-off adjustment to the sector."

UBS, Switzerland’s largest bank, said last week it will cut another 7,500 jobs, bringing total staff reductions to almost 20 percent of the workforce. Edinburgh-based RBS plans to liminate as many as 9,000 more jobs worldwide.Overall, the number of jobs in the City, London’s main financial district, is expected to tumble to 295,000 in 2009 after 28,000 job losses in the industry last year. Employment levels may start to recover in 2010, and reach 313,000 in 2012.