Employment in corporate finance in London will jump by 12% to 14,400 this year, according to the Centre for Economics and Business Research.

In its latest quarterly business forecasts for London, the consultancy predicted that corporate finance would have the highest jobs growth rate of any financial sector this year.

International banking is likely to have the largest volume growth in jobs, with employment up by 3,100, or 5.8%, to 56,700. Securities trading is expected to add 2,100 jobs, reaching 81,500.

Fund management jobs are expected to expand by 2.4% this year, to 40,300, and by a further 1.9% next year.

Dominic Walley, economist at CEBR, said: "The City has had a much better time this year as a result of the recovery in M&A and the continuing rise in the UK equity market and this has been reflected in increased job numbers.

"But next year we expect the pace of world economic growth to slow and for this to be reflected in financial activity, so jobs growth is likely to be much lower."

Douglas McWilliams, chief executive of the CEBR , said: "The City, defined broadly, is doing well at the moment, particularly on the back of new fast-growing sectors like derivatives and hedge funds."

The consultancy estimated that M&A activity had risen by 32% this year after an increase of 64% last year, though the value of deals is still less than a third of the peak in 2000. A rising equity market has driven activity in this sector, while activity in derivatives will have more than doubled since 2001, it said.