City's super rich swap champagne fizz for solid bricks and mortar

Click to follow
The City of London is celebrating. Not since the champagne days of the Eighties has there been such a fizz in the Square Mile. On Thursday, NatWest did its bit to fuel the party with its take-over of Hambro Magan, a corporate finance "boutique" - a deal said to create up to 100 millionaires.

That's the price today of "golden handcuffs", or the financial incentives needed to keep the best money-makers from jumping ship. All round, the rising stock market and a bumper crop of lucrative mergers has provided healthy margins for profit. So, that means annual pay cheques in excess of pounds 1m for hundreds of the City's 170,000 workers.

Little wonder that Britain is fast creating a class of super rich earners. There are now nearly 50,000 millionaires in Britain and they are multiplying at a remarkable rate: in 1988 there were only 18,000, according to the Inland Revenue. The National Lottery and big divorce settlements have played their part, but many of the new millionaires are being made in those industries that are part of the global, not merely national, economy. In other words sports, entertainment, top management, and financial services.

"The City," said Peter York, the social commentator, "is like an offshore island, disconnected from the rest of the country. Salaries dwarf even what would be considered high earnings in the rest of the UK, because it is part of a virtual economy that is completely global."

But the Nineties bonanza isn't the same as the Eighties splurge. Saving is now as important as consumption. "There is a more sober atmosphere, a realisation that things can change," said one City figure who is on well over pounds 1m a year, "People are not into as much conspicuous consumption. It's not fashionable to wear the size of this year's bonus on your sleeve. People are putting a lot of money away, into the property market or pension schemes."

Lorna Vestey of the upmarket estate agents, Knight Frank, said: "Now we are seeing people coming in to buy large houses for one and two million pounds. People in their thirties with children are buying houses today that in the old days people in the City wouldn't have been able to afford until they were in their forties and fifties."

But they don't, according to Mr York, only want the pounds 1m house, typically doing a brisk trade in west London. "Cars are less important. They're not as bothered as they were about flashy Porsches. They also want to be properly dressed, but there is less of the bright shirts and braces. They're really spending their money on luxury goods that involve services. People don't have much time so, when they travel, the person who gets them that villa, that tightly-timed package is much in demand. They'll buy anything that will save time, anyone who will fetch and carry."

And restaurants are bulging. "Why do you think that the restaurants in SW1, W1 and increasingly the West End are filled to the brim? People don't have time to cook," said Mr York. Restaurants are more ascetic, less celebratory than they were in the Eighties.

So how does anyone get to gain these huge salaries that seem to be the preserve of the few and mainly in the City? "Be lucky," said one senior economist. "These are just ordinary people doing an ordinary job. They happen to be in the right place at the right time. Although it must be said that some have made their own luck.

"Right from the beginning of their careers, they have set their eyes on making money. They have clearly decided to pick particular banks, brokers and fund managers who will pay the best. And now they are reaping the rewards."