Michael Page, the international recruitment group, said today that recruitment in London’s financial services sector had ground to a halt in the latest sign of the economic gloom sweeping Britain.

The company said that demand for permanent staff in the banking sector had slowed dramatically in recent months, adding that many banks are relocating staff to fast-growing economies in other countries, such as Dubai.

Steve Ingham, chief executive at Michael Page, said: “The financial services sector in the UK has got tricky. The further you get away from London, the better it looks.”

Citigroup, Goldman Sachs, UBS and Deutsche Bank are among those that have laid off staff since the start of the year as the credit crunch hit global markets.

One study last month said that 440,400 workers in Britain could lose their jobs over the next two years as the economy slows. Perismmon, the housebuilder, is expected to confirm plans to cut 1,000 jobs in a trading statement tomorrow.

Michael Page said that gross profit in UK finance and accounting dropped 8 per cent in the second quarter of the year.

However, the fall was offset by sharp growth in other areas of the economy, such as engineering and manufacturing, as exporters take advantage of the lower pound.

Mr Ingham said: “It’s going to get tougher, but things are not as bad as the headlines suggest.”

Michael Page generates more than 70 per cent of its gross profit outside Britain after a diversification strategy in which it has launched in a dozen countries since 2005.

Mr Ingham said that “phenomenal” growth in Russia, Dubai, Mexico and China meant that, despite the slowdown in the City, the group was performing well.

Gross profit across the business was up 26 per cent to a record £152.4 million in the second quarter of the year. Shares closed up 5.25p to 236p.

Mr Ingham said: “I am delighted with the performance in the second quarter against the backdrop of weakening conditions in our markets."

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax