Employment in the City of London is set to increase by 8,000 this year, with the mass job loses of the early part of the decade being cancelled out by 2005.
A report from the Centre for Economics and Business Research (CEBR) says that employment in London’s financial sector will be back at its 2001 high of 325,000 in 2005 and will hit a new peak of 330,000 by 2006.
The CEBR’s predication of a 2.7 per cent increase this year is almost triple the figure it predicted last September and underlines that the recovery is more vigorous than previously thought.
Some 26,000 jobs were lost in the City between 2001 and 2002, hitting a low in the second quarter of 2002 when employment in the sector fell below 300,000.
But areas that were particularly hard-hit by job losses – notably corporate finance and international banking – will not recover fully until 2008, the report predicts.
”We forecast that the number of corporate finance jobs will expand by 4.3 per cent this year. However, the decline in job numbers after 2000 was so severe that we predict that the 2000 peak level of 16,000 will only be reached in 2008,” it said.
"International banking is also forecast to take until 2008 to reach its previous peak level of jobs though growth in business with emerging markets like China and India is likely to drive activity in this area."
The fastest jobs growth will come in fund management, which is expected to hit pre-downturn levels by the end of the year. Securities and derivatives employment, which held up during the downturn, is expected to continue growing.
But while the CEBR says that its forecasts “seem to be consistent with recent reports from companies in the sector”, it warns that recovery could still be knocked off track by a slowdown caused by rising inflation or international instability.