Employment in London city is bouncing back

LONDON - Employment in the City of London's financial services industry could be back to dot-com boom levels next year, a survey shows.

Employment in the City is forecast to rise by 4000 to 320,000 on average this year and to reach 325,000 in 2006, topping the previous peak of 324,000 in 2000 at the height of the internet stock boom.

The survey from finance industry consultancy the Centre for Economics and Business Research expects international financial sector activity to rise as mergers and acquisitions (M&A) business increases.

"Although the sharemarket has been flat so far this year, activity levels in the City are improving thanks to innovation in areas such as derivatives, and a rebound in merger and acquisition work," said economist Andrij Halushka.

City employment levels dropped sharply after the internet stock bubble burst after 2000 and hit a low point in 2002 of 305,000.

Banks' payrolls have been recovering since then, but the City has not seen a return to the frenzied hiring of 1999/2000 when M&A and equity market activity was at record levels.

Some banks have been cutting jobs, particularly in equities sales and research, where margins are under pressure.

The researchers predict that if there are no upsets in world financial markets, the City could see job numbers growing to 339,000 by the end of the decade.

Last year, corporate finance saw only modest growth in jobs after the M&A market slowed down in the second half of the year.

"This year we expect it to be more vigorous, with a resulting 1.4 per cent jobs growth leading to a total of 13,000 jobs in 2005."

Fund management has been adding jobs at a fast clip - 1.5 per cent to 40,000 - this year with the growth of hedge funds.

- REUTERS