We could usefully put eggs in other baskets – but the City is a major part of the economy

The City has become a careless shorthand for the banks and the bad bankers housed within

There are two schools of thought about how best to rebalance Britain's economy. One is to throw the government's weight behind manufacturing, grooming those industries where we already excel – such as aerospace, life sciences and car making – to become world beaters that export across the globe and sustain thousands of highly-paid jobs at home.

The other is to board up the City of London.

Both would achieve the same end – creating an economy that no longer stacked all its eggs precariously in the financial services basket. But to dismantle the Square Mile – the envy of Germany and France and nudging ahead of New York as the finance industry's global capital – would cripple Britain's income.

It's a hard truth to take for many taxpayers who had little choice in bailing out RBS and Lloyds, as well as underwriting insurance schemes and the like that stopped others going to the wall. Yet the source of some of our economic slump today is also one of the best chances we have of climbing back out of it.

The City has become a careless shorthand for the banks, and the bad bankers housed within them. It is clear from the latest crop of rogue traders that it takes only one or two bad apples to generate billion-pound losses. A broader community clusters around the banks' flows of money, sustaining many more well-paid and well-taxed jobs.

Bear in mind the largest accounting firms, Deloitte and PricewaterhouseCoopers, which have recorded strong top-line growth in what might otherwise have been expected to be sluggish years. At the same time, they've kept up high levels of graduate recruitment.

London is stuffed with lawyers too. English law remains one of our best exports. Roughly half of the work carried out in the average Magic Circle law firm here will concern transactions that have nothing to do with Britain. And the insurers are on a roll, with the Lloyd's of London insurance market recovering well from a costly, disaster-strewn 2011.

What banks urgently need to do is rebuild their reputations as well as their balance sheets, so ordinary people can begin to understand why welcoming the money men is not bad news for Britain.

But while bank bosses conjure with issues of image and culture, the City has been suffering. Jobs have been slashed in line with plunging trading volumes. New safeguards being introduced in the wake of the financial crash have already eroded London's competitive edge, to the benefit of Singapore and New York. A eurozone-wide banking union to shore up shaky continental lenders could strengthen Frankfurt's arm.

Figures earlier this year from the Centre for Economics and Business Research showed that one pound in every five earned by Londoners is used to fund the rest of the country.

So the City does matter, whether people like it or not. The trick is to make it much less risky without killing its role in sustaining jobs and wealth. Think of it in Olympic terms. Curmudgeons worried by cost and traffic gridlock grumbled about London hosting the Games this summer, but would we really be better off if all the action had taken place in another city?

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballStriker in talks over £17m move from Manchester United
Sport
Radamel Falcao
footballManchester United agree loan deal for Monaco striker Falcao
Sport
Louis van Gaal, Radamel Falcao, Arturo Vidal, Mats Hummels and Javier Hernandez
footballFalcao, Hernandez, Welbeck and every deal live as it happens
PROMOTED VIDEO
Sport
footballFeaturing Bart Simpson
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
News
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
ebooksAn unforgettable anthology of contemporary reportage
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
The eyes have it: Kate Bush
music
News
i100
Life and Style
tech

Apple agrees deal with Visa on contactless payments

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

.NET Developer

£650 per day: Harrington Starr: .NET Developer C#, Win Forms, WPF, WCF, MVVM,...

Day In a Page

Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor