Eighteen months ago, the City was riding high. Companies flocked from across the world to take advantage of London’s principles-based regulation and wide investor base. The mood on Wall Street was more embattled. The subprime mortgage market was showing signs of strain and three separate commissions were bemoaning a loss of US competitiveness in financial services.

What a change the credit crunch has wrought.

Both financial districts are suffering through tens of thousands of job losses and are wary their cash-strapped governments will impose new taxes. Initial public offerings have fallen off a cliff and each country has experienced a high-profile financial failure – the UK’s Northern Rock and Bear Stearns in the US.

But London seems to have endured more, perhaps because it had more to lose.

'The brand of London has taken a hammering because of Northern Rock,' says Tim Linacre, chief executive of Panmure Gordon, a London stockbroker that also has a large US presence. 'I don’t think it is terminal, but London needs to be absolutely on its toes.'

Financial Times