The current credit global crisis could cost the UK’s financial services industry up to 11,000 jobs, as consumer and business confidence rapidly declines, warns the CBI.

It points to a recent survey carried out by accountancy firm Price Coopers Waterhouse that questioned 79 firms operating in the financial services sector. A whopping 97 per cent of those questioned said they believed that conditions would worsen during the financial year starting April 2008. In addition, nine out of ten of the companies expected the credit crunch to last well into 2009.

Worryingly for financial sector workers the survey also highlighted the number of firms that had reduced their workforce over the first three months of the year outnumbered those who increased their compliment by 25 per cent - the highest numbers of jobs lost since March 2003. Worse news still is that over the first three months of the 2008/2009 financial year, companies anticipating reducing staff levels outnumber those expecting to increase them by 33 percent, representing a loss of almost 11,000 jobs in the sector.

The number of jobs lost over the last three months of 2007 has mirrored the reduction in profitability with almost half of the firms surveyed reporting a fall. The reluctance of banks to lend has directly affected the companies surveyed, and even though the CBI anticipates that interest rate cuts in the near future will help the situation, it doesn’t believe trust will be easily restored. They are convinced that credit markets will not be operating in the way they have in the recent past, and believe it will be a long time before there is a return to the favourable lending conditions that have operated over the last decade.

Particularly highlighted in the survey were securities trading companies and UK life assurance firms, with both markets convinced that the global credit crisis would significantly affect their sale and revenue growth. But, even though life insurance companies were pessimistic, firms in the general insurance sector felt they would be least affected by impaired investments. And despite finding the going hard, building societies managed to diversify the spread of their business and lift their profitability. However, in total contradiction to every other market sector, firms dealing primarily in fund management are still aggressively expanding their headcounts.

But the good news, however slim, is that most of the companies believe the credit crisis is not as apocalyptic as recently painted and that rather than a full-blown recession leading to even more redundancies there will be a turnaround in the year beginning 2010.

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