More blood-letting in the Square Mile

Jul 08 2003 by Brian Amble Print This Article

The financial services sector faces a further round of blood-letting over the summer with firms planning to lay off up to 10,000 workers, the Confederation of British Industry (CBI) has warned.

The latest CBI / PricewaterhouseCoopers quarterly survey of the sector published on July 7 shows that business levels and confidence in the rose over the past three months for the first time in a year.

"It's too early to celebrate but the end of the Iraq war and revival in the stock market have boosted confidence in financial services," said CBI chief economist Ian McCafferty .ď

In the March survey, which was overshadowed by the Iraq war, confidence fell at its fastest rate since the Russian financial crisis of autumn 1998.

But between 7,000 and 10,000 jobs were lost in the City during the first three months of the year as firms struggled to reduce operating costs, and the CBI says that redundancies are expected to continue at the same rate over the summer.

Most badly hit are life insurance and fund management. In contrast, building societies and finance houses said they had hired staff over the three months to June.

ďThe continued pressure on jobs and worries about the level of demand indicate that growth in confidence is still fragile." said John Hitchins, UK banking leader at PricewaterhouseCoopers.

Despite the threat of mass redundancies, business confidence does seems to be returning. The balance of firms saying they are optimistic about their business situation has swung to plus 8 per cent in June from minus 51 per cent in March.

Banks, fund managers and finance houses are experiencing the fastest growth, with insurance registering the poorest performances.