Think tank calls bottom of job market - corporate finance to gain most

A UK think tank, the CEBR, has joined a growing chorus of voices that says investment banks will become net hirers, rather than firers, next year.

Corporate finance will be the biggest beneficiary, with headcount in the City of London growing 3.9% in 2004 and 7.1% in 2005, according to a report by the CEBR (Centre for Economics and Business Research).

That would be a rapid turnaround from the current state of play. The CEBR estimates corporate finance job losses in 2002 and 2003 will total 20%.

The securities sector will also gain. Though headcount this year will fall 4.2%, it is likely to rise 2.1% next year and 4.3% in 2005. Gains in the following two years will take 2007 securities headcount up to 84,500 - or 15% higher than its peak in 2001.

'The jump in activity in the equities markets since the end of the Iraq war is likely to mean that job numbers in securities dealing will start to edge up earlier than in other sectors,' the CEBR says.

It made its forecasts by talking to employers and other research bodies, and by taking into account its predictions for UK economic growth. While this is hardly an exact science, the upward employment trend is in line with other surveys about investment banks this year, including one by the Confederation of British Industry.

Treating derivatives and foreign exchange together, the CEBR predicts headcount will maintain the anaemic growth of the last two years, rising by less than 1% annually until 2007.

Fund management is the weakest sector. Headcount will fall 4.2% this year and 0.6% in 2004, before picking up slowly in 2005.

Total 'City' employment - including insurance staff, lawyers and others - will edge up to an average of 294,000 next year, from 290,000 in the third quarter of 2003, the CEBR believes. Growth will quicken thereafter.

If that is correct then the bottom of the cycle has been reached right now, after more than two years of job losses.