WARRINGTON, UNITED KINGDOM -- (Marketwired) -- 06/17/13 -- Amid a dearth of revenue, Britain's leading banks are gearing up for a massive round of layoffs and employment cutbacks -- a move that David Mowat says will have seismic effects, not just in the banking industry but throughout the UK. To validate his assertion, Mowat points to a recent article from Bloomberg, which notes that, by the end of this year, the four largest banks in Britain are planning to eliminate as many as 189,000 jobs. This will bring employment to a nine-year low, and further cuts may come next year. Mowat has responded to the Bloomberg article with a new statement to the press.
In his press statement, David Mowat -- MP from Warrington South -- comments on the important role of these banking jobs. "The UK financial services employs over a million people," he notes. "As we rebalance our economy it is important that this industry does not lose its worldwide leadership position."
Despite Mowat's words, the current state of the UK's banking sector appears grim. According to the article in Bloomberg, Royal Bank of Scotland Group Plc, HSBC Holdings Plc, Lloyds Banking Group Plc, and Barclays Plc will likely employ somewhere around 606,000 employees by the end of 2013. This marks the lowest employment level since 2004, and a 24 percent drop from its peak in 2008.
"The industry is under pressure from investors to reduce fixed costs as Europe's sovereign debt crisis crimps income from investment banking as loans sour in the region," Bloomberg notes. The four major British banking firms posted 108 billion pounds of revenue in 2012, a 13 percent loss from its revenues in 2008. Costs, as a portion of revenue, increased over this same stretch of time.
The total employee costs of these banks -- which include salaries, bonuses, and pensions -- totaled 37 billion pounds in 2012. Though this marks a slight drop from the past few years, it compares unfavorably with the 25 billion pounds spent in 2004.
Ishmail Erturk, who lectures on banking at the Manchester Business School, is quoted in Bloomberg as saying that "The reduction in workforce is driven by three things: economic decline, investment banking not producing as much income as it did and banks reducing the wage bill to hit profit targets promised to shareholders."
The Bloomberg article also notes that automation and online banking continue to lead to employee cuts in Britain's major banks.
As an elected official representing the Warrington area, David Mowat has long expressed concerns over unemployment levels in Britain, and is devoted to bringing more job opportunities to the area he serves.
Previously Global Managing Partner for Energy with consultancy Accenture David Mowat was elected to the UK Parliament in May 2010. His interests include banking reform, energy and climate policy, and the regional economies. Since September 2012 he has been Parliamentary Private Secretary to Greg Clark the Financial Secretary to the Treasury.
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