New York 'faces 165,000 job cuts'

New York City could lose as many as 165,000 jobs as a result of the crisis in the financial sector, the city's chief financial officer has warned.

Comptroller William Thompson estimates the positions will go over the next two years, including 35,000 directly employed in the financial sector.

The 165,000 figure is more than double the earlier prediction Mr Thompson made in July of 80,000 job losses.

Since then the health of the US financial sector has worsened sharply.

As the country's financial industry is centred on New York, the city is bearing the brunt of the downturn that has seen Lehman Brothers seek bankruptcy protection, and fellow investment bank Merrill Lynch bought by Bank of America.

'General recession'

Mr Thompson said the increase in his job cut estimate reflected "the spreading of the economic troubles to other industry sectors as the nation slips into a general recession".

His fears are shared by New York City Mayor Michael Bloomberg.

Mr Bloomberg has already ordered a cut in New York City's budget as the losses among Wall Street firms mean they may not have to pay most taxes to the city for a number of years - or at least until profits return.

Last month he told all city agencies to cut their spending by 2.5% this financial year, and by 5% for the next.

The US government is currently implementing a $700bn bail-out package for the financial sector, and, as part of the package, on Tuesday unveiled a $250bn plan to purchase stakes in a wide variety of banks to help restore confidence in the sector.