The number people employed in London’s financial sector should hit an all-time high of 327,000 by the middle of 2006, according to figures released by the Centre for Economics and Business Research (CEBR).
The recent recovery in UK share prices and better economic prospects are expected to lead to a reversal in the decline in City jobs that followed the bursting of the dot.com bubble.
Employment in the City has fallen from an all-time high of 319,000 in 2001 to 304,000 in 2002, the CEBR said. Last year saw a small rise to 308,000.
CEBR expects the rate of jobs growth to pick up over the next few years and says that it expects 332,000 to be employed in the City by 2007.
But, the report's author, Andrij Halushka, said that the optimistic forecasts assumed that the global economy would avoid serious disruption.
"Our upbeat forecasts for the City are based on the assumption that two serious risks facing the world economy - from Middle Eastern politics and the imbalances in the American economy - will ease gradually," he said.
"However, if this assumption is proved wrong, repercussions for international finance could be damaging."