Guardian UK: Banks and insurers prepare to sacrifice jobs to protect profits

Banks and insurers prepare to sacrifice jobs to protect profits


Phillip Inman
The Guardian, Monday June 30, 2008



More than 10,000 jobs are expected to disappear from the financial services sector over the summer as the credit crunch erodes the profits of banks and other finance companies.

Employers' organisation the CBI says the worsening outlook for jobs among banks, insurers and City firms is part of a long-term trend that is "going to play out for some time" as the knock-on effects of the sub-prime crisis and resulting credit squeeze slow the UK economy.

Warnings of the expected jobs slump follow a bleak three months for the sector. According to the latest financial services survey by the CBI and accountants PricewaterhouseCoopers, the impact of the credit crunch on British industry worsened over the past quarter, as profitability fell at a record pace and business volumes declined at the fastest rate for 17 years.

The survey also found that hopes earlier in the year of a quick recovery were dashed after more than nine out of 10 firms said it would take at least another six months for market conditions to improve.

Restrictions on lending among the banks and high interbank interest rates were also a concern as they squeezed lending to individuals and businesses.

Ian McCafferty, the CBI's chief economic adviser, said: "The impact of the credit crunch on financial services has deepened over the last three months, and conditions look set to remain difficult for some time yet.

"Profitability in the sector is being badly hit, so firms are trying hard to trim costs by planning to cut back on training and marketing for the first time in a number of years. ,,,,,,(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/jun/30/creditcrunch