Global economic gloom sees UK financial services cutting back on jobs
BRITISH financial services firms are planning more job cuts after stockmarket volatility and fears about the global economy caused the "mood to darken", a report revealed today.
The pace of growth in the three months to September in the UK was at its slowest for more than a year and optimism fell for the first time since March 2009, according to the survey by business body CBI and PricewaterhouseCoopers.
Firms expect "more challenging conditions" in the next three months as the slowdown continues and profitability grinds to a halt for the first time in two years amid signs the global economic recovery is faltering.
The number of financial services workers rose slightly over the past quarter but that trend is set to reverse, with banking, life insurance and general insurance firms expected to cut back on staff numbers.
Among securities trading and investment management firms, which have been particularly hit by recent volatility in stock markets, more expect to cut jobs than create them for the first time in two years.
However, British building societies expect to show a strong increase in employment over the next quarter.
Financial services firms had begun recruiting again in 2010 following the big cutbacks in the wake of the financial crisis. The CBI said employment levels have been on the increase in most quarters since early 2010 but are expected to slip again next quarter amid worries about the strength of the economic recovery.
CBI chief economic adviser Ian McCafferty said: "After a torrid couple of months on global financial markets, the mood has clearly darkened.
"Uncertainty about future demand, worries about the global recovery and shifting regulatory sands are weighing on sentiment.
"With business volumes predicted to slow further and little growth in income expected, firms are planning to reduce their headcount in the next quarter."
Profitability increased over the past quarter as business volumes rose but is expected to flatten off as growth continues to slow.
Optimism in the banking sector was hit by market volatility amid fears about the eurozone debt crisis and exposure to Greek debt.
The shake-up in the sector proposed by the Independent Commission on Banking also "continue to overshadow banks' confidence", according to Andrew Gray, UK banking leader at PwC.