A whopping 79 per cent of City firms expect to have trouble recruiting the right staff in 2007 – even though 75 per cent expect hiring activity to be greater than in 2006.

The findings come in the Morgan McKinley employment monitor, which also reveals that 64 per cent of surveyed investment banks expect the 2007 City economy to be as strong or stronger than 2006.

Robert Thesiger, chief executive of Morgan McKinley, says: “The last 12 months have seen the City economy remain buoyant and the majority of financial services institutions are confident this trend will continue well into next year.

“The challenge will be sourcing the talent required to facilitate growth. The ‘war for talent’ has been a constant theme in the City throughout 2006 and this will continue to be the case in 2007.

“Attraction and retention will remain at the top of the HR agenda with organisations looking outside traditional candidate pools and to the global marketplace in their search to secure the talent they need.

“Despite some recent murmurs in the market that 2006 will be a hard act to follow, the research and anecdotal evidence suggests that the overriding sentiment in the City is that 2007 will be another strong year.”