U.K. financial-services firms may cut an estimated 11,000 jobs in the second quarter, with almost all the reductions occurring at banks, according to a survey by Britain’s biggest business lobbying group.
The contraction in the finance industry defied expectations as lenders, insurers and assets managers all predicted three months ago that they would add jobs during the quarter ending in June, the Confederation of British Industry said today in the report. The companies expect to hire about 6,000 employees in the third quarter, the CBI survey found.
“The investment banking and capital markets side of the industry is contracting,” said Julian Wakeham of PricewaterhouseCoopers LLP, which helped the CBI compile the report. “We expect to see that contraction continue. The overall compensation for individuals working in that industry we would expect to see contract as well.”
Europe’s sovereign debt crisis hurt sentiment in the second quarter due to concerns that Greece might leave the euro and about the solvency of Spanish banks. While U.K. financial firms reported that their revenue and profits rose in the three-month period, companies still became increasingly pessimistic about their growth prospects, said Ian McCafferty, chief economic adviser at the CBI.
About 13 percent fewer respondents said they were more optimistic about business than three months ago, according to the survey. Banks were 1 percent less optimistic.
“The sentiment in banking is broadly flat if slightly down,” Wakeham said. “That’s driven by fairly robust business volumes. That’s offset by macroeconomic uncertainty and obviously some of the conditions in Europe.”
The survey of 108 companies was conducted from May 18 to June 7.