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'150,000 London jobs to go this year'
Jonathan Prynn and Hugo Duncan13 Jan 2009
A SAVAGE downturn in the London economy will destroy almost 150,000 jobs in the capital this year, according to a new forecast.
The recession will hit London worse than any other region of the country because of its dependence on the City and other professions such as the law, advertising and consultancy.
The warning came on yet another day of heavy job losses and grim economic news. Investment bank Merrill Lynch and its new owner Bank of America are preparing to axe about 1,900 staff in one of the biggest single culls in the history of the City.
Meanwhile, official figures showed the trade gap widening alarmingly last month to its biggest deficit since records began in 1697.
The stark new prediction on jobs from the Centre for Economics and Business Research suggests London's GDP will shrink by 3.4 per cent this year compared with a national decline of 2.9 per cent. By the end of the year more than 147,000 jobs will have been lost, the think-tank says.
Alarmingly, there will be a further 1.1per cent slide next year with a loss of 81,000 jobs, it adds.
CEBR economist Jorg Radeke said: "Given London's exposure to financial and business services it should be no surprise that it will be the worst-hit region."
Banks in the City and Docklands have laid off tens of thousands of staff since financial meltdown was triggered by the collapse of Lehman Brothers in September.
The combined Merrill Lynch and Bank of America group is looking to shed 30 per cent of its workforce in London with many staff being told to reapply for their jobs last week.
Merrill employs 4,500 in its European headquarters at St Paul's, while Bank of America has 1,700 working in the capital. The cuts are part of a plan to cut between 30,000 and 35,000 staff worldwide.
Analysts reckon about 28,000 jobs went in the City last year with another 34,000 set to go this year.
Citigroup is reducing its global headcount by 52,000 while Commerzbank, Nomura, Credit Suisse, Goldman Sachs, Morgan Stanley and Royal Bank of Scotland are also wielding the axe. Britain's yawning trade gap with the rest of the world shattered hopes that the fall in the pound would boost exports and shelter the economy from the worst of the global recession.
Official figures today showed the gap - the difference in value between what Britain imports and exports - stood at £8.33 billion last month.
David Buik, of BGC Partners, said: "After that deplorable set of trade figures and in particular the catastrophic drop in exports, I hope we do not hear any more that the fall in the pound will be good for exports. What exports?"
Hetal Mehta, senior economic advisor to the Ernst & Young Item Club, said: "The impact of weaker sterling is being completely dwarfed by a collapse in world demand, but given the extent of the depreciation in the pound in the past few months, today's figures showing such a significant widening of the trade gap are hugely disappointing."
Reader views (8)
There are jobs and then there are jobs!
- Yorkie, Stalbridge,Dorset, 13/01/2009 17:05
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Fly - the point of the announcement was that because food sales tend to rise in a recession, Tesco would have expected strong figures at this point. The fact that their sales rise was disappointing reflects a drop in non-food items which is precisely where the rest of the high street is also being hit. Bottom line - more bad news on the economy accompanying the words from the BRC today on the depressing figures for December bar a lucky few.Others less reliant on non-food such as Morrisons have as a result performed better. I don't think the food sector's going to pull us out of the recession though do you - their growth just means we're eating and drinking more at home rather than spending money in pubs and restaurants unfortunately to cut our costs down and this will lead to closures and job losses here too before long
- David B, Manchester, 13/01/2009 16:56
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150,000 jobs to go in finance, law, advertising and consultancy. So that's jobs in making things up, upholding the rules of those made-up things, putting a positive spin on those made-up things and telling people how to jig about those made-up things. Phew, for a minute there, I thought it was something to worry about and that farmers or manufacturers or scientists - you know, people with jobs that actually produce real things - were at risk. But no, it's just more of those jobs can literally and metaphorically be packed away in a cardboard box (as illustrated in your excellent photo) without anyone noticing the slightest difference in the real world.
- Callum, London, 13/01/2009 16:53
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To be honest, I'm surprised they didn't go down, because most occasions I visit their Barkingside store they never have the essentials such as certain fruits, vegetables and toliet paper on the shelves.
Others obviously have desserted Tesco like I'm about to.
- Scott, London, 13/01/2009 14:35
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I agree with Fly, London. There is a breed of analyst and commentator who believe that only endless growth and increases in profits are acceptable. Most of these clowns have never worked in the "sharp end" of business and believe that ever larger numbers grow on trees or are placed in Companys' accounts by the fairies. Growth of 2.5% is quite respectable in the current economic climate and should not be scoffed at or regarded as a harbinger of doom.
- Peter Sykes, Pirot, Serbia, 13/01/2009 14:17
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Spot on, Fly - that's what I thought. A juggernaut moving at 30mph instead of 60mph is still a juggernaut, after all.
It's going to take time, and it's going to be painful, but we've got to learn that an economy predicated on growth is not sustainable, and not good for PEOPLE. For one thing, in our globalised world, it requires population growth (which we've got anyway, whether we like it or not) - which puts intolerable demands on resources and pushes out other species from our planet. Population... infestation.,.. call it what you will, we've all got to become more responsible.
Look at my (very well-stocked, and often cheaper than Tescos, for things like produce, anyway) independent supermarkets: they only need to make enough profit to cover their overheads and pay their staff - not bankroll expansion plans. OK, I realise that shareholders' demands are at the core of our obsession with "growth". Here's an idea, if it doesn't sound too much of a contradiction. If you must invest in shares, make them in more sustainable or "green" industries. I don't think the Tescos of this world will have any problem holding on to their market share.
- Karli, Tottenham, London, 13/01/2009 12:51
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I've been in my local Tesco's once, it was an absolutely horrible experience never to be repeated, even ASDA has more class, I'll stick to Waitrose thanks.
- Bob, Cheam, 13/01/2009 12:31
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did I miss something here - Tesco's sales went up by 2.5% and not down??? Where the poor little analysts and shareholders disappointed by this little growth or did they expect year on year growth, doubling of profits etc etc. This really is a prime example of how sad we as a society have really become.
- Fly, london, 13/01/2009 10:19
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