Of course, the City will never be the same again. It is going to shrink. Earlier this year, JP Morgan was predicting 40,000 jobs would go in the square mile—a number that will surely rise following the autumn meltdown. Once lucrative activities such as securitisation and credit derivatives are being slashed; many hedge funds, private equity groups and other businesses that depend on debt will disappear. Meanwhile, traditional City deal-making will grind to a halt as the recessionary effects of global deleveraging start to bite.
But these problems are not unique to London, and nor will they determine whether the City can hang on to its status as one of the world’s leading financial centres. Politics will determine London’s future status—both at a domestic and global level.
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