20,000 City jobs to go

City jobs will be hit hard by stock market falls

Almost 20,000 jobs will be cut in the City over the next 18 months because of the global stock market's bear run.

The report from the Centre for Economic and Business Research (CEBR) says 9,900 jobs will go in the financial sector with knock-on effect of another 10,100 being cut from the services sector.

The think-tank estimates that the Ftse 100 is undervalued by about 600 points but thinks while the US markets keep on falling, the UK will head in the same direction.

The report says, "expectations for profits are still out of line with any realistic prediction of likely performance, so there is plenty of scope for further downward adjustment".

Not floating

The impact on the City is further illustrated by a report from KPMG on Monday showing that the number of companies floating on the stock market has come to a standstill in the UK.

Only two companies joined the Official List in the last three months, the mobile phone operator Orange and coffee shop chain Caffe Nero, a fall of 93.5% on the last quarter and the lowest number in a decade.

The listings on the stock market raised £3.99bn, most of which was invested in Orange whose flotation was consider far from successful.

No bright future

Neither the CEBR nor KPMG foresee any improvement coming this year.

The CEBR predicts the UK's economy would weaken further throughout 2002, even if the impact of the foot-and-mouth crisis were excluded.

It says that so far the stock market falls have not hit the economy, noting retail sales are up 5.8% on last year and that mortgage lending is a record levels.

But London house prices will come down about 3% and commercial rents are expected to fall 5.6% because of the stock market turbulence.

KMPG says there is "no evidence of a pick up".