“Bah! Humbug!” The words of Ebenezer Scrooge can be heard echoing around the City as companies scale back their Christmas party plans in the wake of the credit crunch.

The era of the no-expense-spared black-tie do at the Dorchester appears to be over for the time being as redundancies and profit warnings hit morale and companies’ balance sheets. Several of the banks affected by the credit crunch are not paying for staff Christmas parties this year, while others are reducing the amount they will spend.

Only 77 per cent of private sector companies will provide a Christmas party or lunch next month, down from 84 per cent in 2007, while only 67 per cent of manufacturing companies are holding Christmas celebrations, according to the Chartered Institute of Personnel and Development (CIPD).

For those that are holding parties for staff, plans have been seriously scaled back from the Christmas celebrations of the past few years.

Barclays and Morgan Stanley have both told their staff in recent weeks that they will not be funding Christmas parties. Even the legendary Goldman Sachs New York party appears to be under threat, as the bank has told its usual caterers for the event that their services will not be required this year.

Rich Ricci, chief operating officer of Barclays Capital, which recently acquired Lehman Brothers’ North American operations, wrote in an e-mail to staff: “In the current difficult environment for our industry and for the economy as a whole, which affects not just financial services firms but our clients as well, it is not appropriate for us to do anything that might be seen as inappropriate by any of our stakeholders. We have therefore decided that there will be no firmwide or departmental seasonal parties funded by the firm this year.”

Nabarro, the City law firm, Bank of America, Lazard, and American Express are also understood to have ruled out Christmas parties this year. Royal Bank of Scotland, which is set to receive a capital injection of up to £20 billion from the Government, has restricted its spend to £10 a head, while Lloyds TSB, fresh from agreeing to buy HBOS, will also allow staff a “modest” amount.

Other banks, including Citi, have not yet announced their plans to employees.

One former Lehman Brothers employee, who was taken on by Nomura when it bought part of the collapsed bank, said: “There’s just been no mention of anything for the whole company. I think we’ll go out as a desk and pay for ourselves, but we definitely haven’t heard anything about the company funding a party.”

Bankers are also less likely to fund extravagant parties themselves with the threat of more redundancies and severely reduced bonuses hanging over the City.

Johnny Roxburgh, co-owner of exclusive party planners The Admirable Crichton, said: “There’s definitely a cooling in the corporate side of our business. It’s very difficult when people are making staff redundant to be maintaining the lavish spending that we’ve seen in recent years.”

The company is introducing a doit-yourself canapé kit, priced at £10 for 12 canapés, which can be assembled or cooked in the office, aimed at companies who are cutting back on their Christmas party budget.

Extravagant gestures such as hiring limousines complete with strippers to transport groups of City workers between venues seem to be in abeyance too. Paul Miller, a spokesman for Limousine Strip, said: “We’ve definitely noticed a tail-off in the number of City boys ordering our limousines.”

Several of London’s high-end party venues are reporting a shift in what companies spend on their staff.

Grosvenor House, the JW Marriott Park Lane hotel, reported a couple of cancellations and an increase in the popularity of all-inclusive events that are easier to budget for.

Zoe Watts, head of events at the Natural History Museum, said companies usually booked events about six months in advance with many leaving it until a month before to book an event, and choosing cheaper catering.

Victoria Grossmith, head of events at the Science Museum, said: “Along with the rest of the world, we are starting to see some knock-on effects of the economic situation on our corporate events business.

“These include shorter lead times as it’s taking longer for clients to reach a final decision on the venue, presumably due to budgets. And in a small number of cases, we have been asked to delay confirmed events until a later date pending budgetary sign-off.”

The recession Grinch may not have stolen the City’s Christmas yet, but the celebrations will be distinctly toned-down.

The party’s over

- Back in the heady days of Christmas 2007 about 3,000 Barclays Capital employees attended a party in a marquee erected beside the Houses of Parliament, rumoured to have cost £600,000

- Last year, traders at the London Metal Exchange hired limousines complete with lapdancers and dwarves serving champagne to ferry them between a bash at Grosvenor House and a nightclub

- Lakshmi Mittal, the Indian steel magnate, threw a £30 million six-day wedding party at the Palace of Versailles for his daughter, Vanisha. Kylie Minogue gave a private performance for 1,000 guests, who drank their way through 5,000 bottles of vintage champagne

- Sir Philip Green, the retail tycoon, spent millions on a three-day Bar Mitzvah for his son, with live concerts by Andrea Bocelli and Destiny’s Child, and erected a giant synagogue in his garden, designed by his wife, Tina

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