6,000 City workers may lose jobs in wake of credit crunch

Last updated at 11:41 05 October 2007

Thousands of City workers face the

sack in the wake of the credit crunch as

investment banks and other institutions

make cutbacks.

The Centre for Economic and

Business Research (CEBR) consultancy predicted

more than 6,000 job cuts in the

City, while bonus payments are also

expected to be slashed.

It came as Chancellor Alistair Darling

warned of a sharp slowdown in economic

growth next year.

The grim outlook follows three

months of financial turmoil which has

seen lending between banks dry up.

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The so-called credit crunch, which

was sparked by the collapse of the subprime

mortgage market in the US, has

slammed the brakes on private equity

takeover deals and led to a major downturn

in profits at investment banks.

Queues of customers withdrawing

cash from Northern Rock further

dented confidence in the City where

workers are braced for job losses before


Jonathan Said, senior economist at

the CEBR, said: “We expect to see

weaker economic data seep into the

market and that could trigger more

job losses.”

UBS this week said it planned to axe

1,500 investment banking jobs in London

and New York after its first quarterly

loss in nine years. Morgan Stanley

is also cutting about 600 staff while

Lehman Brothers sacked 2,500 around

the world over the summer.

Matthew Osborne, a partner at headhunter

Armstrong International, said

more job cuts will follow unless conditions

improve. “We are predicting job

cuts in fixed income before the bonus

round,” he said.

According to Jonathan Evans, headhunter

for investment banks and managing

director of Sammons Associates,

even top performing City workers could

see bonuses fall by as much as 25 per

cent this year.

“The bonus this year will be keeping

your job,” said one banker.

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