London: The City Under Siege? Job Losses, Bonus Cuts and Law Suits

Job losses, EU caucuses, bonuses plunging and law suits are putting the City in the headlines for all the wrong reasons.

By the end of the year, The City of London will have lost 27,000 jobs over the course of 2011, to bring its workforce back down to the levels of 1998.

The Centre for Economics and Business Research (CEBR), the economic consultancy that carried out the research , warned that the prospect of tighter regulation such as the Vickers report on Banking as well as the Eurozone debt crisis were the cause of the job losses across a variety of sectors including trading, insurance and banking.

Rob Harbron, author of the research, said: "It's a worrying statistic for the London economy, the long term consequences could be severe."

Although there were seemingly endless problems in the Eurozone with leaders "failing to get a grip of the situation" this was only a part of the problem, he said.

"There is a very fine balance on keeping the regulations tight so we don't have another banking collapse and letting the market place breathe a little. If you look at economies such as Hong Kong, they seem to have hit it right."

CEBR, which had earlier in the year predicted there would be job creation as opposed to job losses, said employment would flatline for a number of years to come.

"London drives the national economy," says Harbron. "If the capital is badly effected it may well affect the whole UK for a long time."

European caucus

Following the EU Summit on Wednesday, the 17 members of the Eurozone agreed to form a new "Euro Summit" exclusively for those countries that use the euro - Britain, of course, would be excluded.

The newly formed caucus would meet twice a year and discuss fiscal and monetary policy, which has led some experts, including the Prime Minister himself, to worry about the level of influence Britain would have European economic policy.

David Cameron, who is in Perth this week ahead of the Head of Commonwealth meeting, said that London was "under attack", as he sought to establish Britain's role as an EU member but not a part of the Eurozone.

He said: "London is the centre of financial services in Europe. It's under constant attack through Brussels directives. It's an area of concern, it's a key national interest that we need to defend."

Bonus plunge

Bonuses in the City have dropped 38 per cent to a ten-year low in the wake of the Eurozone crisis with profits a third of what they were prior to the banking collapse. The bonus pot this year will be £4.2 billion compared to £11.5 billion in 2007/8.

Although the Chancellor, George Osborne, hiked up the bonus tax to 50 per cent, some predict that the total income to the Treasury will be lower than the figure in 2007 when taxes wer smaller.

Although many will consider the bankers to still be earning too much in bonuses, Douglas McWilliams, chief executive of CEBR, said: "The real losers of these numbers will be the Treasury and the taxpayer."

In another layer of red tape, banks will only be allowed to pay 20 per cent in cash bonuses, under new European rules.

Goldman Sachs £10 million tax let off

As the Occupy London protesters settle in for thewlong haul, highlighting the growing anti-corporate feeling the country, the campaigning group UK Uncut, an NGO Group who think that the cuts should be spread equally across society, is gunning for the most controversial of financial giants, Goldman Sachs. They have written a letter to HMRC demanding the investment bank pay a £10 million tax bill.

It follows revelations that the investment bankers avoided interest payments thanks to a secret deal with the head of HM Revenue & Customs.

The London law firm Leigh Day & Co has taken the formal first steps to mount a legal challenge to HMRC over the Goldman Sachs deal. UK Uncut supporters claim it was contrary to HMRC's own policies and therefore unlawful.

Rosa Curling of Leigh Day, told the International Business Times: "We have a strong case, and we hope that this can be settled out of court. The evidence is pretty strong against the HMRC."