City jobs axe fear as the hiring drops away

The number of new job opportunities in the Square Mile and Canary Wharf plunged by a quarter last month and headhunters warned worse was to follow.

It cast further gloom over the state of the British economy as the Bank of England met for one of the MPC's most eagerly awaited interest rate decisions in years.

The Bank was widely expected to cut rates from 5.25% to 5% to bolster growth and restore confidence to the ailing housing market although many business leaders were calling for a half-point cut.

Billionaire George Soros, one of the world's most respected investors, today warned the credit crunch was far from over and accused the authorities and the banking industry of complacency about the extent of the crisis.

"I think the situation is far more serious than the authorities admit or recognise," he said. "Because of that, the situation is going to get worse beore it gets better."

City headhunter Morgan McKinley said job vacancies in the financial sector tumbled 23% last month as London, the powerhouse of the British economy, felt the pain.

Job seekers were out in force but with banks and other financial firms reluctant to hire new staff, it took far longer for applicants to secure a position.

Investment banks have already slashed thousands of jobs and it is reckoned that 10,000 roles will be axed this year as firms deal with massive losses and falling business as a result of the credit crunch.

Royal Bank of Scotland today cut 200 jobs in global banking and markets following its takeover of ABN Amro.

Robert Thesiger, chief executive of Morgan McKinley owner Imprint, said: "I think most would agree that the remainder of 2008 will be tough for both the financial services industry and financial services recruitment.

"Confidence is of paramount importance within any economy, but particulalry in the micro-economy of the City, and until there is a significant increase on existing levels, financial services and within that the recruitment environment will remain challenging."

Rival recrutiment agency Hays said the bottom has fallen out of the full-time City jobs market.

"There is little action in permanent recruitment in the Cty," said Hays finance director Paul Venables, mirroring a warning earlier this week about the state of the jobs market for bankers, lawyers, accountants and IT contractors by arch-rival agency Michael Page.

Job cuts and lower bonuses in the City have hit the London housing market with experts warning prices will slide over the next three years.

The Halifax this week reported house prices around Britain fell at their fastest pace since September 1992 last month.

The International Monetary Fund last night warned that the US will fall into recession this year.