There were tears, hugs and the solace of alcohol for those who left Canary Wharf yesterday with their possessions in cardboard boxes. But the collapse of Lehman Brothers spread so far and so fast yesterday that across the capital it was felt even by West London poodles.

Lucy Kennedy, who runs a dog-walking business in Kensington, lost business almost immediately. A Lehman employee had phoned that morning to tell her that he no longer needed a professional to look after his poodle. “I’ve also had customers who have decided to get their dogs rehomed, to save the expense,” she said.

For many of those filing out of the bank’s London headquarters yesterday, it was a painful end of a long association. About 5,000 Lehman staff lost their jobs yesterday with no guarantee that they would be paid up to date, no payoff and no pension. Many had bought homes or borrowed heavily on the back of share options that made them paper millionaires – but which are now worthless.

For 24-year-old Edouard d’Archimbaud, it was supposed to be the beginning of a new career as a trader. But he was intercepted on the way to his desk and told that his first day would also be his last. “Everybody is fired,” he said. “A friend of mine working for a French investment bank told me a joke last week that Lehman Brothers employees were putting only £5 on their canteen cards so they would not lose any money. It was a joke, but now it is a reality.”

Mark Exley, a former Lehman Brothers trader who had 11 years of bonuses locked in as shares until next year, watched helplessly as his dreams of early retirement evaporated. At their height, the shares were worth several hundreds of thousands of pounds. Many of his former colleagues at the bank, which he left in March, would be much worse off, he said. “For managing directors, 50 or 60 per cent of their bonuses were paid in stock, so for some people that would mean $2.5 million to $3 million. I know a lot of people at Lehman who have spent the money already – they have bought holiday homes or other things.”

Some employees managed to remain upbeat. Marion Gilburt, 36, who is pregnant with twins, said: “It is emotional for everyone, and even more emotional for a pregnant woman. At least I have something to look forward to.”

Sphinx Patterson, 35, who until yesterday ran fitness classes for the bank’s employees, described the reaction at Canary Wharf, in East London. “Girls were crying, men were hugging each other,” he said.

“People were in the bar on the seventh floor getting p***ed on lager and red wine. Some of the girls told me that they don’t know if they’re even going to get paid this week. I spoke to a lovely receptionist. She was in tears as she was packing away her pens.”

Mr Patterson, from Willesden, northwest London, was one of the thousands of people whose livelihoods are affected by business from Lehman staff. He found out that he was out of a job when he was told his class was cancelled. Trevor Chelsea, a butcher in the Smithfield meat market, said: “We supply to restaurants in the City and when people lose there jobs there, they'll stop eating out . . . it’s not just the bankers who will be hurt, but all the people in the places where they spend their money.”

Administrators appointed to salvage the company said that they could not guarantee staff would be paid. The European branch of the bank habitually sent its money to New York at the end of each working day and was repaid each morning. No money arrived yesterday.

Tony Lomas, of PricewaterhouseCoopers, said that he had told staff quite bluntly that there was no cash in the company. “We started the day with no certainty that we would be able to make payments due at the end of the week. We still don’t know.”

The shock of the collapse was written in the faces of traders who left their office for the last time yesterday carrying their possessions in cardboard boxes. Some looked up long enough to see the impact of the event written in orange lights across the width of the building opposite, where an electronic ticker showed the prices of companies in the FTSE 100.

The only trading taking place in the Lehman Brothers building yesterday was in the canteen, where one employee used up the remaining money on his swipe card to buy 30 bananas.

Nearby pubs were doing good business. Michael Barrington-Hibbert, a director of Odgers Search, a City recruitment agency, headed to the Slug & Lettuce pub yesterday morning with a pack of 200 business cards, certain that he would pick up some business. “I’ve seen senior Lehman managers going round the bars, handing out their CVs. One agency has set up a registration desk at the Reebok gym, all the headhunters are down here.”

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