CBI report warns of 60,000 financial job losses

[Watchman]

CBI report warns of 60,000 financial job losses

• Sector job losses could almost double from last year
• Building industry also faces lengthy, jobless recovery

City workers at Bank Tube station.

Tougher times ahead may lie in wait for City workers, seen here on their way home at Bank Tube station in London. Photograph: Rex Features

Up to 60,000 jobs could be lost in the financial services sector this year, according to the CBI and PricewaterhouseCoopers, adding to fears expressed by the International Monetary Fund (IMF) that Britain faces a jobless recovery.

In their quarterly industry health check, published today, the CBI and PwC said the volume of job losses amounts to almost double the number cut in the sector last year. The survey said most staff will be shed in securities trading, closely followed by building societies and life insurers.

There was also a further grim forecast for the building industry. According to a report published by the Construction Products Association today, it will take until 2021 for construction output to reach the levels last enjoyed in 2007. The CPA warns that the flagging construction sector will suffer a drop in output of 15% this year and 2% in 2010 before beginning a slow recovery in 2011.

The poor outlook for the financial services and construction industries, the two engines that drove Britain's economic boom, give ballast to the IMF warnings that Britain's over-dependence on the sectors meant the UK's recovery prospects were worse than those in the euro zone.

In a separate report published today, accountants BDO said also that the UK economy has stalled on the road to recovery as seven consecutive months of climbing output expectations have reversed.

The CBI survey found more firms plan to invest in IT, but continue to cut spending on land, buildings, vehicles and machinery. Andrew Gray, UK banking advisory leader at PwC, said: "They can invest in technology as a way of reducing headcount."

Despite the gloomy jobs figures, the CBI and PwC said that business volumes across the financial services sector grew for the first time in two years in the third quarter of the year, though levels of business were still considered to be well 'below normal'.