Jobs in the financial sector are falling at their fastest rate in 16 years, according to a new survey by the Confederation of British Industry (CBI) and accountancy firm PricewaterhouseCoopers (PwC).

The study found that 56 per cent of companies in the City had declining volumes in the three months to the beginning of March, while around one-third (34 per cent) said they were less optimistic about business conditions now than they were in December 2008.

People with management skills added that employment was a big issue for them, with 40 per cent of organisations revealing they have been cutting staff and 38 per cent noting that the situation is set to continue over the next quarter.

Ian McCafferty, chief economic adviser at the CBI, said: "Conditions remain exceptionally tough in the financial services sector, and have not been helped by equity markets having fallen further since our last survey in December.

"Sharp drops in revenues and profitability are causing continued suffering, while business volumes remain very weak. Firms are making heavy cuts to staff numbers and investment plans to make savings and reflect weak demand."

Figures from the Office for National Statistics published earlier this month revealed that there were more than two million people out of work in the three months to January.