More City jobs under threat

More City jobs under threat

A prolonged war in Iraq could lead to further job cuts in the City, a leading think tank has warned.

The Centre for Economics and Business Research has already predicted 10 to 15,000 job losses in London's financial district by the end of the year.

This comes on top of the 20,000 financial jobs lost since the current downturn began two years ago.

But it does not include the likely effect of a long war on financial markets, which could be severe.

Significant risk

Some commentators, including Nicola Horlick high profile head of SG Asset Management, have predicted savage job cuts if the conflict goes on longer than currently expected.

Ms Horlick has said up to 15% of City workers could lose their jobs, if it becomes apparent by July or August that the conflict will last to the end of the year.

The CEBR said it is not expecting such a long-drawn out conflict.

And it did not expect redundancies to be as bad as the recession of the early 1990s, when 17% of City jobs were lost.

But there would still be a risk of further significant job losses.

Paralysed

CEBR economist Andrig Halufkha said: "If things go wrong our figure of 15,000 could be well on the low side.

"However, I have to add that during the second half of last year the rate of job losses was much higher."

He said the markets had been paralysed by uncertainly in the run up to war.

This had lifted temporarily but was now back with a vengeance.

'Frightening' prospect

Simon Benstead, a partner in financial recruitment agency James Associates, said the war was making a bad situation worse.

He said business was already down by "40 or 50%" on the same period last year, with many clients delaying recruitment decisions.

"If they could get it [the war] over with quickly, the financial services sector would make a fairly rapid recovery," he said.

Many people were worried and feeling even more nervous because of the prospect of a prolonged conflict, he added.

No meltdown

But Oliver Wells, managing director of financial recruitment specialists Michelangelo, said the impact of the war was being overstated.

Although it might be grim times for fund managers, there were plenty of other opportunities in the financial sector, he said.

"I don't accept that we are heading for meltdown at all.

"I am confident that there will be jobs for quality people.

"There will still be financial products, unless money disappears and bartering takes over."