6,000 City workers face jobs axe

THE City is braced for more job losses with 3,000 staff at one investment bank expecting to hear next week how many of them will be sacked and reports of a major cull at Abbey National.

German banking giant Dresdner Kleinwort Wasserstein, which has already shed 8,000, will reveal on 26 September where a further 3,000 jobs will be cut. Although it has a huge retail operation, many of the latest redundancies are expected to be in its investment banking division, which employs 12,000 people worldwide.

Abbey National said that reports claiming it might cut 3,000 jobs were 'purely speculative' but confirmed its cost- cutting review, unveiled alongside interim results in July, was looking at all areas of operations.

Fears of further City job losses will be fuelled by a new report by the London School of Economics that London's economy is stagnating and could move into recession next year at a time of increasing uncertainty over investment in the capital.

The study by four LSE dons for the Corporation of London says: 'The boom of the late 1990s and early 2000s has been particularly long lasting but there are now signs of stagnation or even a downturn. There is particular evidence that growth in central London has been checked and London's economy could well move into decline over the next few months.

'The London economy is more volatile than that of the rest of the UK and is particularly exposed to speculative tendencies. The macro-economy may be better managed than at the end of the last boom but the global economy is subject to greater stresses and London is more exposed than the rest of the UK to these influences.'

As the London economy wavers in the short term, the academics warn of unanswered questions that threaten long- term prospects. 'Of immediate importance, these include the likely impact of continuing large-scale international immigration, the extent of London's capacity to adjust housing supply to rising demands and whether growth can be sustained if major infrastructure projects do not go ahead rapidly.'

As London's population is projected to rise 20% over the next 15 years, the report calls for 40,000 new housing units a year. Mayor Ken Livingstone estimates 32,000 will be needed.