The average number of City jobs for 2012 is likely to be down to 255,000 compared with the estimate of 288,000 made six months ago. The further fall reflects the impact of the euro crisis on the banks feeding a second credit crunch.

The firm “cautiously” estimates that the position may be starting to stabilise, with a modest recovery forecast for the period from 2013-2016. By 2016, the number of City jobs may have recovered to 268,000.

“The combination of weak demand, aggressive regulation, high taxation and the rising competitiveness of financial centres in the Far East mean that London’s position is weaker than before. London remains the top ranked financial centre but its lead has narrowed,” said chief executive Douglas McWilliams.