U.K. financial services companies will cut an estimated 45,000 jobs over six months as they sharpen the focus on lowering costs, Britain’s biggest business lobby group said.
Banks, insurers and other financial groups cut about 30,000 jobs in the final three months of 2010, the fastest decline for 17 years, Lai Wah Co, the Confederation of British Industry’s head of economic analysis, told reporters in London. A further 15,000 jobs may go in the first quarter of 2011, she said, before publication of the report today.
“That decline in employment is not universal across the sector, it is concentrated in the banks, building societies and also for life insurance,” said Wah Co. “Cost control is likely to be renewed in the first quarter.”
Chancellor of the Exchequer George Osborne is calculating that private companies will create enough jobs to offset the loss of 330,000 public sector posts as government spending cuts bite over the next four years.
Lloyds Banking Group Plc, the U.K.’s biggest mortgage lender, said in October it would cut 4,500 jobs in its administrative and information technology divisions.
Banks expect business activity to be “subdued” in the next quarter and profitability to decline, the report published with PricewaterhouseCoopers LLP said. Lenders will find it “difficult” to raise margins amid weak consumer demand for mortgages and an increased desire for customers to pay down debt, said PwC Banking Leader Andrew Gray in the report. Still, banks are more confident about corporate demand for their services than at any point since 2005, the report said.
Overall business revenue rose in the final quarter across financial services, with the exception of banking, the CBI said. Securities traders and investment managers continue to hire employees, the CBI said. The number employed in the financial services sector will be about 970,000 at the end of March, from a peak of 1.1 million in the third quarter of 2008, the CBI estimated.
The proportion of firms that said the U.K.’s competitiveness has deteriorated rose to 80 percent, the CBI said. That’s largely because of concern that British firms face tougher regulation than other jurisdictions, said Gray.
“A numbers of factors are coming together which is giving banks the impression that life in the U.K. is a fairly tough place to be,” said Gray.
The CBI surveyed 86 companies, including banks, building societies, insurers and fund managers between Nov. 22 and Dec. 1. The CBI represents 240,000 businesses that employ a third of private sector employees.