LACK of bonuses and job cuts in the City of London are causing a brain drain as finance professionals leave this city to go back to their home countries, take a break or change their career paths. Hedge funds, private equity firms and other financial institutions lured top financial talent from Europe and the US to London, promising high salaries and lucrative bonuses.

“I had to go back to Paris because there are not many opportunities in London,” says Dominique, who was made redundant from a hedge fund in December. “Also, there are so many analysts in the market that banks are offering lower salaries.”About 10,000 Europeans left Britain in the year to June 2008, reducing the total number to 842,000, according to the latest figures from the UK's Office of National Statistics.

Against the national trend, unemployment fell in London by five per cent between November 2008 and January 2009, according to the most recent data from the Office of National Statistics, the departure of foreign workers being a factor, economists say.

“There will inevitably be a number of skilled workers who, if made redundant, will return home, but we mustn't underestimate the truly global nature of this recession or the attractiveness of London as a base,” said Helen Hill, director of Policy at the London Chamber of Commerce.

Andrew Evans, managing director of recruitment consultancy, Morgan McKinley, said that in the last couple of months he has “seen a significant number of candidates going back home, particularly to Australia and New Zealand”. Traditionally in December, the contracts of many antipodeans end and they head home for Christmas, returning three to four weeks later. However, since the new year he has not seen the same number returning because contracts are not being renewed. “Some people have left but it's because of the economy and because their professional situation is not satisfactory,” said a spokesman at the French embassy in London.

City workers from overseas who have kept their jobs are also dismayed about the lack of bonuses and the public anger against them. “There will be an exodus of people as it doesn't compensate to live in Britain any more. This will only benefit Frankfurt, Paris and Madrid,” said a European hedge fund manager. The City's reputation as a leading financial centre has suffered, according to 62 per cent of the respondents to a study by accountancy firm Smith & Williamson. In 2007, about 88 per cent respondents said the City had strengthened its status. New York and Dubai are the cities most expected to take over as the world's top financial centres, the report said.

— The Guardian, London