The outlook for City jobs is improving but the recession will continue to bite, according to research from the centre for economics and business research (CEBR).

The CEBR says that the UK is now over the worst of the recession with a degree of stability being restored to financial markets.

The CEBR estimates that 28,000 wholesale finance jobs were shed in 2008 and a  further 29,000 will be lost over the course of 2009, as plans to streamline operations continue to be put into effect.

Its 2009 forecast, produced last October, had predicted a greater loss with 34,000 additional wholesale finance jobs being lost this year, but now puts the revised assessment of the jobs market down to the unexpected speed with which the financial crisis has turned the corner.

According to the CEBR, derivatives jobs will decline by over 40% from peak as demand for complex products dries up, while its expects merger and acquisition related corporate finance jobs to fall by 50%.

It expects City job numbers to gradually recover from 2010 and rise to 313,000 in 2012.

Douglas McWilliams, chief executive at the CEBR, says: “The long-term outlook for the City of London remains in the balance. Clearly there is a need for action to improve incentive payment structures and discourage overly risky behaviour in the future. However, if the regulatory response is too wide ranging and constrictive the government risks the long-term growth of the City.”

Elsewhere, The Confederation of British Industry (CBI) also claims that the worst of the recession is over and expects a recovery next spring, while a separate survey of finance directors by accountancy firm Baker Tilly, shows that half feel the recession will have long-term benefits for their business.

Alex Henderson, associate director at City recruiter Emerson Chase Associates, told Recruiter: “It’s stopped falling as fast as it was, but I wouldn’t say it’s back to the good old days. There are a few more sales people [being taken on] and a few more research analysts in equities and in hedge funds.  But it’s too early to crack open the Champagne - maybe the Cava.”

Matt Coningham, director at City recruiter, Coningham Lee, adds: “We have just been asked to do fill a mandate by a big player in the debt markets (a lender to property developers) the first time in six to nine months in this space.” Coningham adds that he is looking to take on two new members of staff.