THE soaring stock market and the boom in mergers and acquisitions has pushed the number of City jobs to record levels, new figures show.

The Centre for Economics and Business Research (CEBR) says the number of “City-type” jobs, in financial and professional services, rose to 327,600 last year, up 11,600 on the previous year. This beat the record established at the height of the dotcom boom. The CEBR predicts a further rise this year and next. A separate CEBR report to be published this week says the jobs boom will help fuel a rise in house prices in the capital of up to 7%.

“All of the Square Mile’s key activities are doing well,” said Jonathan Said of the CEBR. “The City has continued to strengthen its position as the home for European merger and acquisition activity.

“The total value of M&A activity in the UK rose by 32% last year after a rise of 64% in 2004. This spectacular growth is set to continue. This year we expect a further 52% rise.

“Partly on the back of this M&A activity, equity markets are rallying too. The FTSE 100 index will continue to climb and we would not be surprised if it broke its previous peak of 6,950 in the next 18 months.”

The big growth areas in City jobs are in investment banking, where numbers rose to 57,100 last year. There was also an increase in equities and bonds, professional services, and corporate finance. There was slower growth in fund management, where 40,200 people are employed. Insurance, derivatives and foreign exchange also grew at a slower pace.

Another CEBR report out tomorrow will predict a rise in London house prices of 7.1% this year, compared with only 1.8% last year. Part of this is due to the so-called ripple effect of the boom in the City.

The increase in jobs — which has been accompanied by the return of big bonuses in the Square Mile — also reflects the fact that London has been gaining market share from other financial centres, including New York and Frankfurt.

Gordon Brown acknowledged the City’s success in his budget speech. A Treasury report, Financial services in London: Global opportunities and challenges, said London, supported by regional financial centres, was “succeeding in meeting the challenges of globalisation”.

“No other financial centre can match the scope of Britain’s financial markets,” it said, “and the government is committed to supporting and promoting these strengths around the world.” Gerard Lyons, head of research at Standard Chartered, welcomed Brown’s acknowledgement of the City’s success. “It is good that, at last, he is recognising it,” he said.

According to the Treasury document, London is the location for 70% of the global secondary bond market, over 40% of the derivatives market, more than 30% of foreign-exchange business, over 40% of cross- border equities trading, and 20% of cross-border bank lending.

Two weeks ago The Sunday Times quoted James Cayne, chairman of Bear Stearns, the investment bank, saying London had “a shot” at overtaking New York as the world’s financial centre.

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