CBI predicts 12,000 financial job losses

The Confederation of British Industry is predicting that the financial services sector will suffer at least 12,000 job losses over the next quarter.

The CBI’s latest quarterly Financial Services Survey, conducted with PricewaterhouseCoopers, shows that business volumes fell to a balance of -51%, the weakest level since the survey began in December 1989.

Profitability also took a hit, with 49% of the firms questioned reporting a fall in profits.

This clearly left with businesses with little optimism for the future, with 59% of firms more negative about the overall banking situation than they were in June.

John Cridland, deputy director-general of the CBI, says: “One year after the credit crunch first took hold, business volumes and profitability in the financial sector have taken their hardest hammering yet.

“Firms have become more fearful about the extent and length of the credit crunch, and they are now looking to cut more jobs and scale back investment.”

He adds: “We would expect a minimum of 12,000 job losses over the next quarter.”

Feedback from banks revealed the most downbeat prediction in profitability since December 1991, and building societies also noticed a marked decline.

Andrew Gray, UK banking advisory leader at PwC, says: “A key challenge for banks going forward will be how to improve customer service and develop revenue streams to compete in a world of slowing lending growth.

“For building societies the threat of falling profitability is putting market consolidation back on the agenda and helps to explain why the usually cautious societies have a negative expectation on headcount for the first time in six years.”