| Banks forecast to shed 40,000 jobs |
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| Written by Adrie van der Luijt | |
| Friday, 09 May 2008 | |
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Financial services jobs are particularly vulnerable as the fallout from the credit crunch continues.
Information services company and economic forecaster Experian expects net job losses in banking and insurance to total 40,000 over the period 2008-2011, with 19,000 of these in Greater London. UK GDP forecast to slow The City of London will bear the brunt of the job losses in the capital, with firms expected to shed 10,000 jobs. Westminster and Tower Hamlets will also see lower financial services employment. The world-wide credit crunch will significantly dampen UK growth prospects and narrow the regional economic divide between the north and south, according to the latest Regional Planning report by Experian. William Thomson of Experian said, “Following an expansion of 3.0 per cent last year, UK GDP growth is forecast to slow to 1.8 per cent in 2008 and 1.5 per cent in 2009.” The slowdown will bring the impressive run of job creation to a halt, with UK employment levels set to fall next year for the first time since 1992. The south has enjoyed a clear performance advantage over the north in the past two years, growing 1 per cent a year faster on average. This gap is set to narrow significantly, however, over the next couple of years. Decline in house prices The credit crunch and consumer slowdown will impact on prospects for financial and business services and distribution, hotels and catering, key sectors for London and the other southern regions. Next year the north-south growth division will disappear for the first time since 2002 chiefly because of the abrupt London slowdown. Thereafter the south will pull ahead again, but the yawning gaps of the recent past will not be repeated. The housing market has been slowing sharply in the past six months and this is expected to continue. “Tighter borrowing conditions and more expensive mortgages will bring about a decline in UK house prices of 7.6 per cent over the next two years,” Thomson explained. He pointed out that the boom of early 2007 was uneven regionally and warned that the correction would be more severe in some regions than others. Winners and losers The largest declines in house prices are expected to be in the West Midlands and the South West, with values falling by 10 per cent by mid-2010. Both areas have seen demand significantly weaken in recent months. The South West is further handicapped by being one of the most expensive areas of the UK and by its reliance in recent years on 'second-home' demand to underpin the market. The South East and East of England will see declines in excess of 5 per cent over the next couple of years. Affordability is lowest in these areas, with house prices more than 8 times income levels, and with banks tightening lending conditions this will result in falling prices. Thomson said that winners and losers in the housing market do not fit a strict north-south pattern. Unlike the other regions in the south, he expects prices in Greater London to hold up. Relative to earnings, prices are less inflated in the capital than the rest of the south and housing shortages are severe. “The capital is vulnerable to the risks of more widespread job losses, however, and more restrictive credit conditions,” Thomson concluded. Related articles
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