Frightening news for those in the financial sector, as a study published by the City of London reported that employment at financial services firms in Britain, France and Germany will not return to 2007 levels until 2013.
The report suggests that it will be the U.K. which will be worst affected by the drop in employment, with 10, 000 fewer roles in banking, insurance and fund management in four years time compared to 2007. The report was commissioned by the municipality which runs the UK’s main financial district. A rise in employment will only happen if accompanied by economic growth according to the study.
Slow growth is predicted for the next few years, until 2013 or 2014 when growth will accelerate further. Until then we can’t expect to see the same number of jobs in the financial sector.
European banks and financial firms have lost 140, 000 jobs since the end of 2007, when financial markets crashed after the U.S subprime mortgage crisis. A further 84, 000 jobs are expected to be lost in Europe this year, 35, 000 in the U.K, the continent’s biggest employer in the financial sector.
The economic output of Europe’s financial services industry has shrunk an estimated 6.2 percent in 2009, and will continue to shrink in 2010 before it begins to make a recovery in 2011. Growth is not expected to be rapid at first, at least not compared with the growth experienced between 2000 and 2007.
Many are confident about the financial sector returning to profitability, but warn that it may take some time for this to translate into a growth in employment. Financial firms are though to be focused on ‘growth efficiency’ over the next few years, making the most of the staff they have.
Banks such as Lloyds Banking Group and the Royal Bank of Scotland have both recently announces significant job cuts, despite being rescued by the government. The square mile, as Britain’s financial district is known, pays fifteen percent of all tax paid to the UK government, so the fate of the sector is of concern to everyone in the country.
Many financial institutions are worried that intense regulation could damped the resurgence of the financial sector. According to the City of London’s report, the European Union’s financial services industry is worth 219 billion euros and employs over a million people.
