City braces for fresh job losses

MORE job cuts are expected in the City as mergers and acquisitions activity and shares remain in the doldrums. Senior investment bankers predict that thousands of jobs will go in the Square Mile and on Wall Street in the next month in a desperate struggle to cut costs and salvage profits.

The predicted redundancies are on top of recent cutbacks at banks such as Merrill Lynch, Goldman Sachs and Morgan Stanley.

'It is very tough,' a top executive said. 'I think you'd have to go back at least ten years to find conditions this difficult.'

Workers in corporate finance are expected to be the hardest hit. These are among the most glamorous and highly paid City jobs, where high-rolling dealmakers can pull in millions of pounds in fees for bringing companies together.

Even where they cling on to their jobs, they face huge cuts in bonuses that in good times can easily double or treble their pay packages.

But the dismal start to the year for mergers and acquisitions, with volumes down about 70% from last year's levels, means that expensive bankers may no longer be paying their way. Companies are also putting flotations on hold while equities markets are so unpredictable.