In the most dire forecast so far of the impact of the worldwide credit squeeze on UK jobs, it was today predicted that as many as 40,000 posts in the City will be cut.

The City forecast came from the US investment bank JP Morgan and was double its previous estimate. If borne out, about 5 per cent of all jobs in the City will go in the worst setback since the dot.com bubble burst in 2000, when 7 per cent lost their jobs.

Banks such as HSBC, Citigroup and Morgan Stanley have been axing staff as demand for complex debt and mortgage products has dried up in the wake of the global squeeze on credit. So far at least 2,500 jobs have gone across London, but many in the City are bracing themselves for much deeper cuts.

Based on a rough space requirement of 150 square feet per office worker, 40,000 jobs equates to about 12 of London's landmark "Gherkin" buildings. Thus, city vacancy rates were likely to reach 12.2 percent in 2009 while City office rents were set to decline by 16 percent in 2008-2010.

Oil is the key to world recovery

The shock of $140 oil has created inflationary and deflationary pressures that threaten world economy and policy tools

• Former President Bush energy adviser says oil is running out

BACKGROUND

• Oil is the key to world recovery

• Banks may need to pump billions into scheme

• UK economic growth weakest for three years

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• Full credit crunch coverage

BACKGROUND

• Happy days are over for UK households

• Banks restrict mortgages by brokers

• Credit crunch halves lending at Nationwide

• JPMorgan to cut Bear Stearns jobs

• George Soros: Crunch will bite deeper in UK

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