Hundreds of thousands of jobs to go as a result of economic slowdown
As the economy grinds to a virtual standstill, up to 350,000 people will lose their jobs according to a survey by the Centre for Economic and Business Research (CEBR) and the Hay Group, a management consultant.
This estimate was based on interviews with 120 bosses in charge of companies who generate annual sales of at least £50 million. They discovered that financial services companies expect profits to fall 8.4% during 2008, potentially wiping £1 billion off company profits.
Companies with over 100 employees are anticipating a 2.2% fall in profits.
Russell Hobby, associate director at Hay Group, said as a result of these challenging conditions, profits will be hit but will expose firms not prepared to take advantage of the upturn when it comes.
John Ward, economist of CEBR said, without a doubt, this is the most challenging environment the UK economy has faced in 15 years. For many, this will be the first time they have ever experienced this kind of downturn.
As profits fall, business are getting prepared to cut staff with companies saying they are set to reduce their workforce by an average of 1.1%, which represents 350,000 jobs across the UK.
On the positive side, business leaders’ predictions revealed that the UK would ‘narrowly’ avoid a recession.
In related news, Wall Street giants Citigroup and Goldman Sachs, have announced job losses today.
Citigroup, which is America’s largest bank, is believed to be axing up to 6,500 investment banking jobs. It is understood that trading desks in New York, London and other cities will be eliminated.
Goldman Sachs is to eliminate 10% of its workforce in the M&A and corporate fundraising divisions this year. Redundancies are already underway at the banking giant.
Other investment banks to reveal job cuts include Swiss investment bank, Credit Suisse, who plans to axe 75 jobs in in its investment bank and support services division in the UK.
UBS, which is Switzerland’s largest bank, has reduced its workforce by almost 7% after being hit by heavy losses.