City could lose 40,000 jobs

Analysts at JPMorgan said as a result of the fallout from the US sub-prime mortgage crisis and the credit squeeze, job losses London’s City financial district could be around 40,000. This is double the figure first feared and amounts to one in 10 jobs.

Some companies in the Square Mile and Canary Wharf are grinding to a halt and bankers and support staff are all at risk.

In a note published jointly last week by JPMorgan banking and property analysts, the US investment bank warned of severe job cuts this year and next after an initial 10% cull of staff in debt securitisation, private equity and other investment banking departments hammered by the turmoil in financial markets.

Yesterday, Prime Minister Gordon Brown met with bank chiefs from Lloyds, Barclays, HSBC, RBS and Nationwide as the City struggles with fallout from the US sub-prime crisis and the credit squeeze.

If JPMorgan’s estimate is right, the shake-out will be even more serious than the one that followed the bursting of the dotcom bubble back in 2001. The new figure also indicates the days of multi-million-pound bonuses are over, at least for the medium-term.

It is expected that large stockbroking firms could make announcements with regard to redundancies within the next few months. Smaller stockbroking firms have been quietly laying off staff for months.

The job cuts will result in a decline in property rents as office space becomes vacant.

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