Financial services to cut jobs and costs

Banks, fund managers and insurance companies will bear the brunt of job losses in Britain's financial services sector over the coming months, the CBI said today.

Despite signs of a modest improvement in business conditions, the quarterly snapshot of finance conducted with PricewaterhouseCoopers said the shedding of staff over the coming months would be at its fastest rate for two years.

The survey found that the sector had returned to profitability after a tough time in the summer, but that the need to cut costs would lead to further cuts in employment.

John Hitchins, UK banking leader at PricewaterhouseCoopers, said: "The strong performance experienced by financial services firms in the first half of 2004 is unlikely to be repeated at the beginning of 2005 as only modest volume growth is predicted to continue. Sectors with signifi cant personal lending businesses had the most pessimistic outlook.

"The recent reduction in headcount is expected to intensify in the banking, fund management and insurance sectors and all sectors expressed concerns about the level of demand affecting growth this year."

Ian McCafferty, CBI chief economic adviser, said: "Like other sectors of the economy, financial services picked-up after a poor August and September. With oil prices having slipped back from their peak and interest rates likely to be stable for the time being, some of the headwinds from the wider economy earlier in the year have diminished.

A separate report commissioned for the Mayor of London, Ken Livingstone, found that the gender pay gap in the capital was greater than anywhere else in the country.

Women in the capital earn on average 25% less than men, compared with 18% less across Britain, the study found.