London will lose around 27,000 financial jobs this year due to the euro zone debt crisis and economic stagnation in Britain, Centre for Economics and Business Research (CEBR) has said.
The economic think tank warned that amidst fears of another downturn, employment levels in the city will slash employment back to 1998 levels.
Market activity and confidence has slumped since the crisis began and many investment banks in London are cutting costs to stay profitable while the prospect of regulation and higher taxes are forcing them to look further afield. Recruitment too is expected to plateau over the two years before gradually picking up in 2014
Rob Harbron, an economist at CEBR, said, “These latest estimates demonstrate how London’s role as a key centre in global finance is increasingly at risk.”
“With the possibility of further taxation and higher regulation constraining the relative desirability of London as an important financial centre, the gap between the rising Far Eastern centres such as Hong Kong and Singapore continues to narrow.”
CEBR’s report said tighter financial regulations suggested by a government report would add to banking sector woes and take a toll on job creation.
In April, CEBR predicted 2,000 jobs would be created in 2011 and 3,000 next year but it now sees stagnation in 2012.