And Sussex commuters to the City could see 12,000 jobs in the Square Mile disappear during the next two years as new technology and cost-cutting programmes sweep the UK's financial centre, according to a report just out.

But, the report, by the Centre for Economics and Business Research (CEBR) adds, the jobs downturn in the Square Mile will be short-

lived and employment will pick

up strongly in the new millennium.

The CEBR predicted around 79,000 new jobs could be created between 2002 and 2015, boosted by preparations for the potential introduction of the single European currency and a further acceleration of European acquisitions.

However, the research suggests London's Square Mile is likely to suffer from the growth in Internet use and cost-cutting as more financial groups succumb to takeovers and mergers.

The report warns the growing use of the Internet in the financial sector means businesses no longer need to be located in the capital and a greater proportion of jobs will go to areas where living costs are lower.

Employment in the City could also shrink as the need for expert investors declines with the rise of so-called passive funds, where investments automatically track indicators such as the FTSE-100 or All-share indices.

The CEBR added that the downward correction in stock markets currently under way could depress interest in investing in financial markets, holding back job creation in the sector.

But the research group said while employment would fall between now and 2001, jobs growth from 2002 could increase sharply.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.