London’s financial sector will lay off 13,000 staff in 2013, cutting employment in a key British economic sector to a 20-year low, as job vacancies also drop in Europe and even Asia, studies showed.
Financial firms in Europe’s biggest financial centre have laid off more than 100,000 employees since a market peak in 2007, driven by four years of crisis that have brought a wholesale reassessment of banks’ role and business models.
Weak deal making will drag London job levels in 2014 to their lowest since the early 1990s, the Centre for Economics and Business Research predicted on Tuesday
The centre previously saw banks and other financial firms adding around 6,000 jobs next year, but now expects a collapse in many business areas during 2012 and little chance of a big rise in activity next year.
“The models indicate at best stabilization during 2013/14 and a gentle rise thereafter,” the centre’s said in its statement.
The financial sector accounts for just over 10 per cent of the British economy, more than construction or manufacturing, and is seen by most analysts as a key driver of the long-running economic boom that ended with the 2008 crisis.
Worries about the health of the euro zone kept equities trading volumes weak in 2012, hurting many London stockbrokers, while mergers and acquisitions in the U.K. have also slowed.
This has hit smaller firms as well as international banks with big bases in London, with Germany’s Deutsche Bank AG among those cutting jobs in 2012.
Switzerland’s UBS AG is set to shed a further 10,000 staff in the next few years, with London to be hit hard.
Tougher regulations on capital are also forcing more investment banks to shrink and focus on different businesses. UBS is exiting large parts of its fixed income unit, which uses up more capital than areas such as equities.
Vacancies at financial firms are also dropping fast in other parts of Europe and even Asia, where hiring was holding up better a few years ago, another survey showed.
In the U.K., job opportunities in finance were down 24 per cent in the third quarter of 2012 compared with a year ago, a report from recruitment website eFinancialCareers said, while in the rest of Europe they fell 28 per cent.
Australia posted the steepest decline in that period, with vacancies falling 34 per cent.
In the U.K., the only bright spot in finance sector employment was in IT, where vacancies rose slightly even as banks cut back on some areas of technology, eFinancialCareers said.