Thousands more City workers to lose jobs, says CBI

Banks no longer safe as houses

By Kelly Fiveash • Get more from this author

Posted in Financial News, 29th September 2008 13:15 GMT

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The Confederation of British Industry (CBI) warned today that thousands of City jobs in the UK are set to be lost over the next three months.

Tumbling profitability, a slowdown in business negotiations in Blighty’s struggling financial services sector and a major dip in confidence about the current turbulent market conditions have all contributed to increase job fears in the City.

The CBI published the bleak findings in its latest quarterly survey, carried out with PricewaterhouseCoopers even before the collapse of Lehman Brothers, the rescue takeover of Merill Lynch and Washington’s $700bn bailout plan for US banks. The report covers leading UK High Street banks, building societies, insurers, securities groups and fund managers.

Business over the past three months has been sluggish at City firms, with only ten per cent reporting that their turnover had climbed during the period, while 61 per cent said it had fallen. It’s the biggest drop seen since the survey begun in December 1989, said the CBI.

Half of the financial houses that took part in the CBI survey reported a serious decline in profitability and predicted that worse was still to come.

“One year after the credit crunch first took hold, business volumes and profitability in the financial sector have taken their hardest hammering yet,” said CBI deputy director-general John Cridland. “Firms have become more fearful about the extent and length of the credit crunch and they are now looking to cut more jobs and scale back investment.”

The report coincides with today’s news that Bradford & Bingley PLC has been thrown a lifeline by the UK Treasury – which announced this morning that the bank had been nationalised, with the immediate loss of 370 jobs, and the promise of more cuts to come.

The government will transfer Bradford & Bingley’s retail deposits biz and branch network to Banco Santander-owned Abbey National.

The Treasury said it had sought "a range of private sector solutions" before bailing out the bank to maintain financial stability and protect customers and taxpayers, according to reports.®

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