Barclays Bank is reducing IT contractor rates by around 10 per cent to “bring them in line with market rates”.

The decision, effective across the entire group from the end of August, follows a pay cut of 10 per cent for contractors working at Barclays Capital, which took place in May.

The news of cuts in hourly rates at Barclays draw a sharp contrast with research carried out by the Association of Technology Staffing Companies (Atsco) earlier this year, which claimed that hourly rates in the financial sector had gone up by 11 per cent in the prior six months leading to pay of between £45 and £50 per hour.

But Atsco chief executive Ann Swain warned of a potential slowdown in the second half of 2008.

“Although it is unlikely there will be slashes of permanent workers in the next six months, the second half of the year will be sluggish for IT employment growth,” Swain told Computing in February.

The financial services industry has also seen high demand for positions in risk management, compliance, web services and security.

“Employers do not necessarily want the commitment of permanent staff, so if things go downhill they will take advantage of the flexibility of hiring freelancers,” said Swain.