The number of jobs in London's financial district is set to fall by 13,000 to 237,000 next year and to drop even further to 236,000 in 2014, as a result of weaker trading and sluggish corporate activity, according to figures from the UK-based think tank Centre for Economics and Business Research.

The CEBR’s 2014 prediction has been revised down from its forecast of 256,000 issued six months ago and is the lowest figure since 1993.

The financial services sector has seen widespread job cuts since the financial crisis of 2008 and more recently - at around the midpoint of this year - falls were evident in many areas of City activity, reflecting the impact of the eurozone crisis. In recent days, for example, UBS, Switzerland's largest bank, announced heavy job cuts in its investment banking arm, with some of the reductions taking place in London.

Equity trading has seen a decline of 20 per cent in value year-on-year, with international orders down by over 50 per cent, and gilts trading has fallen by a third, reflecting the proportion locked up by the Bank of England. Meanwhile, currency trading is down 5 per cent this year - the first fall since 2009 - and UK merger and acquisition activity has fallen by around a third during 2012; international M&A has fallen further and the derivatives sector is also down by around a fifth so far this year, the CEBR said.

The CEBR’s forecasting models predict that at best these sectors will stabilise over 2013-2014 and rise moderately thereafter.

“The fall in activity is partly a function of the weak economy, partly a hangover effect from the financial crisis and partly caused by increasing regulation which limits access to bank cash to bankroll financial transactions. The business model for many firms in the City - which was based on taking a percentage from yields of 8 per cent plus - has to change in a world where low yields are likely for many years to come,” said Douglas McWilliams, CEBR’s chief executive.

The CEBR’s predictions come at a time when confidence in the banking, finance and insurance sectors is in the doldrums, according to the latest Grant Thornton Business Confidence Monitor. The survey found that only a small number of firms are confident of their prospects for the coming year.