The warning comes in a week that has seen global markets slump following the emergency sale of US market leader Bear Stearns and an admission by the US Treasury that there is a downturn.
Figures from the London Stock Exchange showed the market value of IPOs in London has slipped by 80 per cent this year, compared with the same period in 2007.
‘The financial services industry is being savaged, and therefore those businesses that feed off them will feel disproportionate pain,' warned investment group Pi Capital CEO David Giampaolo.
He added: ‘Some of the most profitable PR earnings come from IPOs and M&A.
It's categorically higher margin so it's higher risk. Will these jobs be cut first? It's painful, logical reality.'
Square1 Consulting chairman David Bick agreed: ‘There are bound to be redundancies if people begin to believe this will last longer than six months.'
Some PR industry insiders suggested the squeeze was already being felt. ‘Recruitment already appears to be freezing, especially in-house,' said one senior City PRO. ‘We are inundated with CVs.'
Most agency chiefs told PRWeek that diversifying the business was key to weathering a bad year.
‘It's best not to be reliant on one sector or business stream,' said Citigate Dewe Rogerson chief executive Jonathan Clare. ‘The truth is that nobody really knows what is going to happen in the next year.'
In the meantime agencies are advising clients to put out more statements than usual in an effort to reassure investors and stakeholders. ‘Candour and honesty is important,' stressed Brunswick senior partner Susan Gilchrist.
Separately, Bear Stearns, the ailing securities giant that sparked plummeting shares, has revealed that just 11 press officers in its UK and US offices have been handling media interest since its bail out by JP Morgan on Sunday.
‘We're dealing with it all in-house,' said Jessica Shepherd-Smith, Bear Stearns' head of comms Europe and Asia. ‘We have seven media relations people in New York and four in London.'
She added that the London press team met JP Morgan's in-house PROs earlier this week. Shepherd-Smith said there were no plans to bring in an agency for crisis comms.