The damage in the economy caused by the credit crunch has had greater implications than we might have thought. Looking at unemployment today, it is not the most pleasant reading out of an economic perspective and it does not look like it will get any better in the near future. The effective rate of job losses last quarter added up to as much as 150,000 jobs and it looks like it will not get better any time soon. The bankruptcy of Lehman brothers is just going to add to this effect, not only by the 4,000 jobs lost over a day down in Canary Wharf, but also all the businesses providing services in the area.
Already days after the crash of Lehman Brothers, businesses like restaurants, gym instructors, local corner shops etc. claimed they have felt the effect. For example, just imagine that Tuesday morning this week there were "4,000" less people using the tube. With an already weak economy, can we handle a job loss of this magnitude with possibillities of more financial institutes following the path of Lehman Brothers. I can even imagine that many of the businesses in the surroundings were initially set up in order to fulfil the needs of this banking giant. Consequently, the fall of Lehman Brothers will bring more unemploymment into the market than only the immediate employees of the bank itslef.
At a point where the economy is struggling can it cope with a massive group of job loss in the financial sector and will these individuals will be able to find a new job in a sector already in crisis. This remains to be seen and I am sure that we will see a slowdown of not only the financial businesses but also local service providers in the city of London.
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