Things are still bad, but they may not be getting worse

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Contrary to reports from various banks that this year opened on a buoyant note, the latest quarterly financial services survey from PWC/the CBI suggests doom continues to prevail.

It says that during the past three months, employment in British financial services fell at its fastest rate since June 1993. It also suggests that employment will continue falling at a similar pace in the coming quarter, when a further 15,000 jobs are predicted to evaporate.

However, things may not be as bad as they seem. The PWC/CBI survey covers the financial services industry in the broadest sense, from retail banks to building societies and finance houses. Significantly, it has unearthed signs of light in a sector close to our hearts - securities trading.

Responses from securities traders suggest things may be stabilizing. Job losses are continuing, but at slower rate than previously. A balance of 18% of trading respondents said they'd made job losses in the past three months, compared to 53% in the previous quarter. 26% said they'll cut staff in the coming three months, compared to 32% in the final quarter of 2008.

At the same time, and after months of decline, most securities traders now expect staff costs as a proportion of total costs to increase over the coming quarter. If we were being optimistic, we might even suggest that this is because staff costs have already been cut as much as possible and other areas will now be targeted for reduction.

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