(LONDON) British financial firms plan to shed jobs at a faster pace after the escalating eurozone sovereign debt crisis dented their confidence during the final three months of 2011, according to a survey published yesterday.
The finance sector's planned retrenchment comes despite faster-than-expected growth in business volumes and rising profits last quarter, the survey by the CBI, Britain's biggest business lobby, and auditors PricewaterhouseCoopers showed.
'Firms are less optimistic than they were and they are employing fewer people,' CBI chief economic adviser Ian McCafferty told reporters. 'There is the growing fear of less availability of finance and constraints of funding.'
British banks, insurers and asset managers look set to axe a further 11,000 jobs in the first three months of 2012, up from 9,000 in the final quarter of 2011, Mr McCafferty said.
The sector had already shed a total of 81,000 jobs between the end of 2008 and the third quarter of 2011, official statistics show.
New vacancies in the City of London in 2011 fell 8 per cent from the previous year and slumped dramatically in the fourth quarter, a separate report from recruiters Astbury Marsden showed. Overall, over 50,000 jobs were created, it added.
Last December, vacancies created in the UK finance sector were down 43 per cent on a year before, and there were on average three qualified candidates for every job in the industry in 2011 compared with closer to two in 2010, Astbury Marsden said.
Investment banks in particular have been slashing headcount as the eurozone turmoil bit into trading profits, and globally about 130,000 jobs were put on the line last year, according to a Reuters tally.
The CBI said the downbeat mood in Britain reflected worries over the euro debt crisis, which has pushed up borrowing costs for heavily-indebted eurozone members, sapping growth among Britain's major trading partners.
The crisis has also prompted banks across Europe to cut lending to their peers amid fears some could go under due to big exposures to distressed government debt, leaving many reliant on loans from the European Central Bank (ECB) for their funding.
The proportion of survey respondents reporting a dip in confidence over the last three month exceeded those that became more optimistic by 24 per cent, compared with a balance of 20 per cent three months earlier, the CBI said.
A balance of 13 per cent of firms reported reduced employee headcount in the last quarter of 2011, while a balance of 18 per cent predicted bigger job losses over the next three months.
A balance of 29 per cent said they would invest less on land and buildings, and a balance of 10 per cent said they would spend less on marketing, the first such decline in more than two years.
British finance firms still managed to grow over the last three months of 2011, with a balance of 29 per cent reporting a rise in business volumes, the highest since June 2007, the CBI said. -- Reuters