The Centre for Economics and Business Research has revised its estimate of the average number of extant City posts sharply downwards for 2012.

 

The move is significant in that financial services is seen as a bellweather sector and where it goes, the rest of the UK economy tends to follow.

 

But the economics consultancy has now put the number of City jobs at only 255,000, down from 288,000 last December, with the majority of posts making up the shortfall having gone already. It is the first time that employment levels in the Square Mile have been as low since the first quarter of 1996.

 

But the figure compares even more unfavourably with an employment peak of 354,000 in 2007, which would appear to indicate that some 99,000 positions have been axed since the start of the recession.

 

The Cebr’s chief executive Douglas McWilliams attributed the additional fall in City employment to the impact of the Euro crisis on the banks, which had led to a second credit crunch and negatively affected the financial markets.

 

But he forecast that the number of City jobs may recover to as many as 268,000 by 2016, although the figure is still well below its peak of five years ago.

 

As for the rest of the UK, the researcher expects unemployment to keep rising over the next five years in every region of the country apart from London, the South East and the East of England.

 

Rob Habron, a Cebr economist, said: “Five more years of pain are expected for much of the UK, with unemployment continuing to rise in almost every region.”

 

The North East of England has so far been the hardest hit, however, and the situation is only expected to get worse as public sector job cuts continue to bite.

 

Unemployment in the region is predicted to rise from 12% this year to 13% by 2016, slightly above the levels seen in 1993 following the recession in the early 1990s. The national average is 8.4%.