Actually, there may not be much hiring next year either

Ah. Despite claims that there are not really hiring freezes (see the comments), that there will certainly be a resumption of middle office hiring next year (says Ambition), and that all the movement of senior staff in 2010 undoubtedly presages substantial hiring in 2011, maybe recruitment in 2011 will be limp after all?

Maybe only 3,000 jobs will now be added in the City in 2011 instead of the 7,000 that were previously expected?

This is what the CEBR has decided. It thinks 10,000 jobs were added in the City this year and job creation that will fall by two thirds in 2011. It's blaming its change of heart on, "a sluggish recovery", "increased caution," and "a tighter regulatory regime."

The CEBR's revelation follows various analyst reports yesterday on the nefarious effects of increased regulation on revenues and returns.

Analysts at Bernstein Research predict that Basel III rules on capital requirements and CVAs (counterparty valuation adjustments) could lead to a 25% reduction in economic value added across derivatives businesses overall, and a 42% reduction in rates and FX (big hirers of 2010).

Separately, analysts at Nomura pointed out that higher capital requirements are driving down potential returns. "To achieve a 15% RoE at BarCap on an equity base of 34bn would require BarCap revenues as high as 26bn, assuming a 33% pre-tax margin. This compares with an annualised run rate of 14bn in H1," they suggested.

The conclusion? 2011 may be a good year for anyone knowledgeable about regulatory capital requirements. It may not be such a good year for everyone else.