London Faces More Than 6,000 Job Cuts

October 7, 2007 2:57 p.m. EST

London, U.K. (AHN) - Thousands of Londoners will lose their jobs next year in the wake of the credit crunch affecting the financial sectors.

The Centre for Economic and Business Research (CEBR) predicted there will be more than 6,000 job cuts in the city, after getting reports from institutions such as UBS AG, Morgan Stanley and Lehman Brothers.

CEBR also forecast bonus payments will be slashed in 2008.

Investment banking is seen absorbing most of the cuts, losing 2,300 positions, including 700 from the derivatives and foreign exchange industries. The insurance sector is seen losing another 600 positions.

UBS this week said it will cut 1,500 investment banking jobs in London and New York after its first quarterly loss in nine years. Morgan Stanley will also let go of 600 staff while Lehman Brothers already sacked 2,500 around the world between August and September.

Before the turmoil that hit the broad finance sectors, private equity firms and hedge funds were among the biggest employers following rapid expansion in recent years.

With the continued downturn in financial markets, CEBR predicts a wider economic slowdown. The retrenchment may last until 2009, CEBR said.

"What we are likely to see as we enter 2008 is a reduction of almost one for every two jobs added this year...But although this equates to a reduction in total jobs of only two percent, it will feel worse than it actually is because the city has become used to adding jobs at breakneck speed," said Sarah Bloomfield, one of the report's writers.

There were 11,000 new jobs in 2007, more than the 4,000 originally projected.