AS the sun dipped below the London skyline on a perfect summer's evening, a queue formed outside the lift leading to the Coq d'Argent, one of the top restaurants in the City of London's — the British capital's financial district.

In its roof garden, champagne popped and glasses were being filled to the brim after the City had a first glimpse of the billions that will be paid in bonuses at the end of the year. There was little sign of the austerity facing the rest of the country.

“The City is buoyant,” said the head of a firm that supplies technology to the financial services sector. “Six months ago they were fearful, but now they're coming out again. There's loads of money out there but no one talks about it.”

By last week the big US banks had reported first-half results, and between them they had a pay and bonus pot of £34bn. UK banks — including the bailed-out Royal Bank of Scotland — will report in the coming days. RBS, HSBC and Barclays have big investment banking arms and are estimated to be sitting on a £5bn wage and bonus pot. While some areas of the public sector are facing cuts of 25 per cent to meet the £99bn of savings needed by 2015, according to June's emergency budget, many people working in financial services are starting to spend again.

And as much of the UK faces an unemployment crisis — there are 70 applications for every graduate job this summer, according to the Association of Graduate Recruiters — financial services firms are predicting a jobs surplus.

Recruitment firm Ambition reckons there will be 10.3 jobs per 10 candidates by September, and 12 to 10 by the end of the year.

“Since the end of last year we have seen lots more job opportunities,” said head of marketing James Callard. “The good people are being snapped up quickly and banks are looking to keep talent with better packages,”

Many bankers said that with public anger about bonuses, new rules and a 50 per cent tax on bonus pots, many banks were simply offering bigger basic salaries. “Fellas that might have been on £80,000 are getting more like £210,000,” said a trader at the Coq d'Argent.

Meanwhile services reliant on the wealth of the City are seeing brighter times, with luxury car dealers, gyms, florists and estate agents all experiencing an upturn. Vaughan Davies of luxury car dealer Sparkcars.com, said “As far as the City is concerned, there isn't any downturn in car sales now.” High-end gyms such as CityPoint Club, where membership costs £120 a month, are also seeing the return of good times. “It is certainly not doom and gloom here,” said general manager Joe Damantay.

Demand from bankers for high-spec flats and houses in Knightsbridge, Chelsea and Belgravia is at pre-September 2008 levels, according to Ian Brownridge of Foxtons Sloane Square branch. “Our City clients are still spending. The difficulty is finding properties,” he said.

Even so, City workers say they are having to show restraint — though on a scale that might not be recognisable in other parts of the country. For instance a trader for a big US bank said the budget for entertaining clients for dinner had been cut from £200 to £150 — a head.

City regulator the Financial Services Authority would argue that times are tougher because of new rules on how bonuses are paid. Now only about 40 per cent of a bonus is paid in cash, with the rest in shares deferred over three or more years. The changes were made when Labour was in government and while the coalition has promised to clamp down on “unacceptable bonuses” its actual policies have yet to be announced.

Even so, banks are looking at ways round the FSA's rules. One possibility is to pay employees in stock that would be exchangeable into cash after just a day. “Banks always have and always will find a way to reward their best people,” a trader at a big US bank said.

A trader for the investment arm of a large UK bank went further “We're being taxed out of here. Ultimately our businesses can be run from anywhere, and banks and employees realise this. Why stay in a country where you are vilified and pay 52 per cent tax?”

— The Guardian, London