It used to be the case that bankers, dealers and brokers in the City waited anxiously around their trading screens when the Chancellor of the Exchequer stood up to deliver his Budget. So little had been leaked and pre-briefed that the stock market often swung wildly as the Chancellor revealed his list of treats and levies and the City tried to digest the new numbers on the hoof.

Much has changed. While Budgets these days still sometimes deliver a show-stopping, market-swinging shocker, this week’s Budget will be marked by an altogether new characteristic.

Many of the very bankers who would have eagerly awaited the Chancellor’s borrowing forecasts and tax moves from their plush desks in the Square Mile are now sitting on the other side of the fence, within the more functional offices of the Treasury, where they are advising the Government.

Since the banking crisis erupted 18 months ago the Treasury has hired a number of City investment banks to advise on how to stabilise the financial sector, on the assistance needed to prevent another bank failure and to direct the Government down a path of recovery.

Alistair Darling did not pursue banking advisers in any half measure. One banker described the Treasury as “chocka” with financiers, many working round the clock to unpick the toxic knot of complex financial transactions blocking up Britain’s credit markets and to devise ways to help the banks to beef up their capital reserves and to start lending again.

Deutsche Bank, the German investment giant, Credit Suisse and Citigroup were all hired as advisers to the Treasury.

The Credit Suisse team is headed by James Leigh-Pemberton, the bank’s chief executive and the son of Sir Robin Leigh-Pemberton (now Lord Kingsdown), the former Governor of the Bank of England. It also includes Ewan Stevenson, a managing director in the investment banking division, and Sebastian Grigg, a contemporary of David Cameron at Oxford.

The team is based at Canary Wharf but regularly decamps to the Treasury. While Credit Suisse declined to comment on the size of its team, it is understood to consist of up to 20 people.

At Deutsche Bank, four heavyweights head its Treasury advisory team: Anshu Jain, head of global markets; Ivor Dunbar, co-head of capital markets; Tadhg Flood, an Irish dealmaker, who advised Barclays on its failed bid for ABN Amro; and Charlie Foreman, who has specialised in working with the Government.

There are rich pickings for bankers advising the Treasury. At the very least, the Government has to devise an exit strategy for how to return the part-nationalised and wholly state owned banks back to the private sector. However, well before that, advisers have to fathom how to entice — or force — the banks to start lending again. Without a stable banking sector, Britain has no hope of pulling itself out of the recession.

While Treasury officials are keen to emphasise that outsiders are kept away from key decisions on taxation and spending within the Budget, any measures in the Chancellor’s statement tomorrow addressing the country’s financial stability and specific banking assistance will have been informed by such outsiders.

Even though No 11 has long been defensive about the size of fees paid by the taxpayer to the banks, it is believed that Credit Suisse and Deutsche Bank have already taken £60 million between them in return for their advice. On top are fees paid to Citigroup, the bank that was bailed out by the US Government and which, with Credit Suisse, continues to advise the Treasury on the Asset Protection Scheme.

While fee-rich business in the City is scarce, work for the Goverment is both plentiful and prestigious. UK Financial Investments — the supposedly arm’s-length body created to manage the Government’s shareholdings in the banks — is hunting for an executive to head the division that will control Northern Rock and the loan book of Bradford & Bingley.

After the banking crisis, the Treasury is effectively staring at a blank sheet of paper in terms of how best to regulate the City. How much power should the Bank of England wield over the balance sheets of Britain’s lenders? Should RBS be forced to carve itself up to avert the systemic risk posed by a financial labyrinth? But the City advisers may yet discover that their biggest task is to patch up the reputation of the beleaguered Treasury.

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