LONDON - London will lose around 27,000 financial jobs this year due to the euro zone debt crisis and economic stagnation in Britain as well as the prospect of more financial regulation, an economic think-tank said on Thursday.

The Centre for Economics and Business Research (CEBR) slashed its estimates for 2011 employment levels in the city to around 288,000 -- a level not seen since 1998 and well below the peak of 354,000 in 2007.

In April, CEBR predicted 2,000 jobs would be created in 2011 and 3,000 next year but it now sees stagnation in 2012. ?

The euro zone debt crisis, which started more than two years ago in Athens, shows no signs of abating. European leaders are scrambling to solve it, and as they wrangle, the euro zone now looks on the precipice of another recession.

Market activity and confidence have taken a beating since the crisis began and many investment banks in London are cutting costs to stay profitable while the prospect of regulation and higher taxes are forcing them to look further afield.