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In a Centre for Economics and Business Research report, it has been predicted that Europe’s largest financial center will axe at least 10,000 jobs next year. This move will definitely be a blow to the economic productivity of the UK; but Asia and the rest of Europe are also expected to follow suit. Since its peak in 2007, financial firms in London had already laid off at least 100,000 workers. This has brought about the reassessment of various business models and the banking role in the City. According to the Centre, London will continue to cut jobs until 2014.
Previously, the Centre had already predicted that financial firms and banks will axe at least 5,000 workers in 2013. However, it has reevaluated the scenario and is now predicting a cut of at least 10,000 jobs due to the impending collapse of various business areas this year. Financial services constitute around 10% of the country’s economy. The volumes of equities trading were rather weak this year due to the overall economic status of the euro zone. Acquisitions and mergers also slowed in 2012.
Even large international banks based in London are not spared. Deutsche Bank of Germany already axed workers in London this year. UBS of Switzerland is also expected to lay off more staff, especially in this city. Stricter capital regulations are causing a lot of investment banks to lay off workers and set their sights on profit in other business areas outside investment banking. UBS, is withdrawing a huge chunk of its fixed income unit to improve its wealth management unit. Opportunities for finance-related jobs in the United Kingdom decreased by about 24% in the 3rd quarter of the current year. According to the eFinancialCareers, job opportunities in finance fell by 28% across Europe.
For wholesale financial services, the Centre predicts that by 2014 the London financial center will have lost 236,000 jobs. According to Douglas McWillams, the Centre’s Chief Executive, this is primarily because of the weak economy, the increasing regulation, and the effects of the 2008 financial crisis. He said that the business model must change because of low yields, which are not expected to improve over the coming years.
The United Kingdom has recently come out of recession due to the outcome of the Olympic Games. However, there is recent data available which suggests that the economic underlying trends are still less than positive. Consumer confidence and retail sales remained poor during the last month. In fact, confidence is at a 6-month low. The service industry also barely grew. The worsening economic depression in other European countries is also affecting London. Equity and debt trading reported a sharp decrease, the Centre said. Foreign exchange trading also experienced its first decline since 2009.
