London is set to lose about 194,000 jobs in the next two years as the credit crunch takes its toll on the financial services sector, according to a leading economic consultancy.
Oxford Economics predicts employment in the capital will be hit more than in any other UK region. Employment will plunge by 97,000 next year – a drop of 2.1% – and by a similar amount in 2010, with total London jobs falling from more than 4.71m this year to just over 4.51m.
The report also warns that recovery will be a 'slow process' that could be hindered by stricter regulation.
'The escalation of the credit crunch will drive a rapid deterioration in employment prospects over the coming year... Financial services will see the deepest job cuts, with losses in the region of 40,000 forecast [in 2009], but most other sectors will be affected,' the report says. The consultancy expects employment in business support services to decline in 2009 for the first time in seven years, with further job cuts likely in the following year as the impact of the financial services downturn filters through.
The City will lose more than 35,000 jobs, a decline of more than 10 per cent, with employment in the Square Mile falling from 331,000 to less than 296,000, according to the consultancy.