There will be far more than 40,000 CoL jobs lost. Probably over twice this figure ultimately. The banking sector has to shrink drastically. This is inevitable.

Andy Johnson, Burton, UK

Brown - “I’m starting a job that I mean to continue.”

Odd choice of words. Eleven years as Chancellor and one as PM, do they amount to an admission that for the past twelve years he hasn't actually been doing anything?

Richard Crow, Warsaw, Poland

"The government is urging mortgage lenders to ..."

Hang on - the government owns one of the biggets mortgage lenders! Why not just under cut the others and force them to follow suit or lose business? That way we might get some of our investment back again!

On the other hand, we could try a tax cut instead of an interest rate cut. That would tend to confine the job losses to the current large surplus of useless civil servants feeding out of the public purse.

KR, Stockport,

John Wood - that cant happen becasue its illegal and against EURO competition rules. The bank of England can get access to money cheaply and without any liquidty buffer priced into their products. Its impossible for highstreet banks to compete with this.

Brett Aubin, London, Wandsworth

To those who talk about "Why don't Northern Rock......" a simple glance at their website will explain why. Under pressure from other Banks, the government and NR have self imposed a "competitive framework". This stops them from using their unique position of the government guarantees to obtain unfair advantage in the marketplace.

ANdrew, Sheffield,

To NICK LONDON.Perhaps these preachers of doom are living in the real world.If these so called experts started living in the real world,perhaps we wouldn't be in the mess we're in.It is staggering that people get paid huge amounts of money for doing very little.What do they bring to the party except the party itself which has gone on for TOO long?

stephen hulton, eure, france

"the question is: who cares?

riccardo, brussels, "

Great comment - very intelligent!

Alex, London,

If the Government wants the banks to lower mortgage rates to home owners - why not just offer them through Northern Rock? Everyone would rush to the Rock to get the loans forcing banks to match the rates or lose the business?

John Wood, Hull, UK

I am astonished that nobody has connected the world-wide credit crisis with simultaneous increase in GP's salaries

T Roberts, Luton, UK

Ian Johnson, Ramsgate, and others seem to live in a different world. The global economic conditions are not an inevitable consequence of the UK's domestic policy, and fiscal policy is surely different from the credit markets which were removed from government controls in Thatcher's time, when I believe Howe was Chancellor. Britain has been living on credit for more years than I care to remember, and it must be clear that governments will not reach any ' targets ' if Joe Public refuses to behave in a responsible way. People living in voluntary debt have only themselves to blame. If they do not read the small print, or even any of the print, that is their fault.

Fred, Droitwich Spa, UK

"....We know what the PM's answer will be. 6000 jobs threatened in a labour constituency [Northern Rock] "quick give then £27 billion". 40,000 in the City of London "So what".

H Irvine, Sheerness, Kent..."

That's a good point, so the smoke can expect a bung of public money to the tune of 6 times that figure? There are a very many MP's and marginal seats there...

Austin Tassletine, South West , UK

What amazes me about this and other similar columns, is that no one at all seems to be defending unelected Brown and his bunch of free loading, totally incompetent, left wing cronies. Surely there must be someone out there in our bankrupt, litter stewn, over regulated, hyper taxed, disincentivised, drunken, expensive, nanny state who thinks he and them are doing a good job and willing to put it in writing here. WHERE ARE YOU WHEN HE NEEDS YOU ?????

DENIS DOWEN, HART & MIAMI BEACH, UK & USA

Chris, Stockport, how refreshing to see such sense being spoken on this forum for once. I think it's high time some of these people who borrowed stupid amounts should fall. Let it be a lesson to others. We are a country more in debt than any other in the EU. We want want want and the consequences of this are never thought through at the time. I don't know why Gordon Brown is in a flap. Oh no, house prices may fall a bit, what a disaster. No it's NOT, they are overinflated and a bit of a fall is fine. Let's reshuffle things a bit, so that we can get a bit of normality.
Now then Simon, London, please don't talk such nonsense: the banks should be forced to match the rate cuts. They are businesses not chariDees.
Being a home owner I don't want a massive drop in houseprices, but with everything so skewed at the moment a little bit of mini recession would be fine by me to get things back into perspective and stop the greedy people taking over the world.
Bring on city job losses!

Shazza, london town,

Of course they are going to put interest rates up , they have to try and inject some liquidity somewhere, raising interest rates is the quickest way. The banks never lose even in times like these .
What happens next is the increase in interest rates puts the squeeze on manufacturing and small business sending a large proportion of the middle class under , dragging the working class with it . We are then in a proper recession and as more people default on mortgage payments the banks increase the interest rates to recover their losses . Hey presto "boom and bust " something that will be written on Gordons' headstone and the only thing he will be remembered for is getting everything hopelessly wrong.
If anyone wants some advice , stay in for the next two years and spend nothing , whilst paying off every conceivable debt you possess because every line of credit you currently have will become increasingly expensive to service.

Nick Dixon, Sutton Coldfield, England

Does this mean that it takes about 40,000 clever people to write the complicated loan structures that are no longer valid/applicable. No wonder it is such a mess.

Jimd, Norwich, uk

H Irvine, Sheerness, Kent

It's these city boys who praise the free market, including the downsides. Or do they want to go back and prop up the miners who were 'no longer needed'?

Most relevant comment of this current situation: "Capitalism for the poor, socialism for the rich".

Funny how when things don't go quite so peachy for the big banks, they come running for government bailouts.

And Chris, London, if 99% of us don't know how it works, then why don't you enlighten us. Seems to most of us that we've had 15 years of the wool being pulled over our eyes!

Jamie, Halifax, West Yorkshire

I don't think the people responsible will be the ones losing their 'jobs', although I agree most of these people would be better off put to real work, 'clever people we must listen to' (=pompous idiots with the right accents) will tell us how important to the country the city is (this has been debunked elsewhere, it isn't) and off they will go on their little greedy psychopath adventures, maybe they'll meet Tony Blair on an island holiday!

Julie F, Redding,

why should mortgage companies pass on rate cuts to home owners, they aren't charities. they should charge what they need to make their businesses profitable in the context of the price of funding and liquidity. the problem here is that people seem to think that they should not be accountable for their own financial mistakes. yes banks have been reckless with lending too much money at the wrong price but no-one forced you to buy that sports car on finance or buy the bigger house just because a bank would lend you the money or to just shut your eyes and hope for the best every time you continue to load up your credit card. yes cheap credit was on offer but we didn't have to take it..

chris, stockport,

Chris Robinson, Hong Kong, Hong Kong

"The banks should simply be ordered to pass on rate cuts or face penalties - even better, mortgagees should be forced to take the same risk as the purchaser - if they lend 70% of valuation then, if the price goes down, their mortgage should be 70% of that figure."

Umm, so if I bought a property 3 years ago at a 4x salary multiple and the value had increased by 50%, my debt to the bank would have increased to 6x salary, and my interest payments 50% higher? How does that help?

Alternatively, if you are suggesting that the mortgage (as opposed to the debt) be tied to a fraction of the property value, that would just mean that you could not get debt if the market flattened off (or if you could, the interest rates would approach unsecured personal debt rates as more of the debt becomes unsecured).

Simon, London,

We know what the PM's answer will be. 6000 jobs threatened in a labour constituency [Northern Rock] "quick give then £27 billion". 40,000 in the City of London "So what".

H Irvine, Sheerness, Kent

One point everybody is overlooking is that the banks have to make more profits to replace the reduced capital caused by recent losses. Banks can only lend a fixed multiple of capital.

Less capital = fewer loans = less money for home buyers and remortgagees = credit crunch = complete slowdown, reposessed homes and property crash plus less money available to help cash strapped businesses hit by restricted budgets = job losses.

The faster the banks replenish capital with increased profits the faster they will resume normal levels of lending. Let's just hope that this time the lessons have been learnt and that sensible multples of asset value are in place.

For all his faults Brown and his colleages know this and will not, I hope, prolong the agony by bowing to popular demand and restricting profit margins. This really will bring long term pain for short term gain.

Martin, Bookham, England

It demonstrates how incompetent this Government has been at predicting the future. Firslt it sold off the nations gold reserves at rock bottom prices when gold is now a very valuable commodity. Then Tony Blair championed globailsation which is proving to be the beast that the west can no longer control, and the root cause the now very precarious economic crisis that we are entering into!

Matt, Napoli, Italy

Surely if the martgage companies reduced the cost of borrowing all round this will reduce the costs of over heads and so the need for job custs diminishes, or is this just another headline grabber to see the economy can be toppled? Grabbing for large profits and greed by the mortgage companies and banks is what makes life difficult for us all, i am sure the directors will still cream their bonus off the top before any loss or profit is announced.

Jason Horn, Tring, England

The BOE rate cuts help those who sensibly noticed that the BOE rates had peaked last year and remortgaged or got a new mortgage at a discount to the BOE rate. The current mortgage rates offered by banks only effect those who are looking to remortgage or enter into the housing market now which is a relatively small proportion of the mortgage market. So the rate cuts don't just help the banks. Many home owners will still be on these deals and have got time to prepare for when they need to remortgage in a year or twos time.
There's too many preachers of doom out there.

Nick, London,

I hate the way that 99% of the commentators on here have no idea what the City (aka financial services sector) actually does, but they're really pleased that people are going to lose their jobs. Presumably everyone who works in the City is a coke snorting, oyster eating, champagne quaffing, obnoxious person who needs to be taken down a peg? Schadenfreude is not a pleasant reaction.

Chris, London,

Mr w. jones,
You seem to be forgetting the huge 'buy to let' brigade, do you think they will hang on to houses when the interest rates are rising and property values are falling?
As for generational mortgages, they are little more than a fantasy for bankers and landlords.
The question is no longer whether or not prices will drop, it's by how much?

steven pill, bedale,

Frank of London - all that means then is that prices will need to drop to whatever earnings multiple the banks are prepared to lend at. As if mortgage banks are going to stop needing to be mortgage banks and as if the housing market does not need first time buyers. Doh!

Oscar, Edinburgh, UK

Interesting to see what Northern Rock does. Side with their banking chums and ignore their Downing Street masters or go the other way and be the uber competitive lender?

Robert Baker, Ascot, England

Has anyone else noticed how Gordon Brown seems to be the John Major to Blair's Thatcher? Former Chancellor, devoid of personality, involved in a war in the gulf, economic turbulence.

Matt Sheridan, London, UK

The Liverpudlian real world of Mr W Jones sounds like rather different from the rest of the real world. If economics worked the way you suggest there would be no markets at all.

David, Guildford,

S. Armstrong, Notingham, England

"A snippet on Radio 4 this morning"

I presume that you still believe in fairies & Santa Claus?

Morvan, Saulieu, France

Chris Robinson, Hong Kong, Hong Kong

"The banks should simply be ordered to pass on rate cuts or face penalties - even better, mortgagees should be forced to take the same risk as the purchaser - if they lend 70% of valuation then, if the price goes down, their mortgage should be 70% of that figure."

I like your grasp of economics! Who do you think would be willing to lend tuppence on those terms?

Morvan, Saulieu, France

What is Brown doing in America, when he is responsible for the mess we are in now? He was the chancellor for the last 10 years, he should have seen the mess he was getting this country into. None of the ministers live in the real world - they have their own hospital in London, they buy alcohol with no duty to pay, they do not have to pay fuel costs, they jump on planes to which the tax payer is billed - THEY SHOULD BE SETTING EXAMPLES - USE WEBCAMS, DO VIDEO CONFERENCING. The tax payer pays for everything, and their wages including extortinate expenses to which they are not ACCOUNTABLE? The ministers have forgotten that they work for the public that actually elected (or not) them in! Be responsible for a change.

Disgruntled, Birmingham,

I find it striking that last year I was getting unsolicited offers of £000's from mostly unheard of financial institutions almost daily, whereas this year I have had just one such letter!

James, Bristol,

To Derek in Blackburn:

You forgot to mention the state of the pound. It has been devalued by 25% in the last 12 months

Tony, Birmingham, uk

I tend to agree with David ( Brussels)- I wonder if a lot of the current mess has been caused by the markets themselves- malicious trading etc. I almost feel someone somewhere got bored and set the hare running for some excitement. I'm not saying all of it but the spreading ripples.- Why? A snippet on Radio 4 this morning - where it was reported that for the housing market its actually not as bad as it seems and more level headedness in reporting would help steady the market- if thats the case for the financial markets why cant they act like grownups, steady themselves and then help the rest of us mere mortals who have to deal with the repercussions of their greed and failures.

S. Armstrong, Notingham, England

Banks are charging on «good risks» the risk premia to pay for their careless marketeer management; the risk premium that they should have charged on «bad risks. Unfortunately for all of us, the banks do not understand what «risk» IS: Some think it’s just a statistic, some think it is a mark-up on the base rate that comes without a catch. It doesn’t. Financial products of higher interest (or return) rates pay better (for he who loans) BECAUSE they come with a higher risk attached to it: A risk premium is not just «money in the bank», it’s a return on risk taking and that is why insurers invented «provisions». The banks, who do NOT understand risk, treat all risk premium as revenue and fail to adequately provide for write-downs: That is why they are incurring losses.
The fact that the dominant breed in the financial sector these days are marketers negatively affects the quality and sustainability of our financial system.

Rui, Lisbon, Portugal

The banks should simply be ordered to pass on rate cuts or face penalties - even better, mortgagees should be forced to take the same risk as the purchaser - if they lend 70% of valuation then, if the price goes down, their mortgage should be 70% of that figure.

Chris Robinson, Hong Kong, Hong Kong

To all thouse saying its good that hosue prices will go down, please live in the real world, even if they do gown down, the only homes you are going to get for that price will be the ones repossesed.

Any one who keeps their job will keep their house and wont sell it to you at a loss please live in the real world, all that will happen is that people who work 9 to 5 jobs will sit on their home's.

For thouse people their homes are not profit machines they are homes 1st and formost and they wont be sold at a loss, they can live in them till the price goes back up and it will.

The only homes you are going to get are the buy to let ones, which will be reintroduced as thouse people go bankrupt or hand back the keys.

You only have to look a a japan to see the future, we may have more building land put most of it is tide up (Green space, National Parks) and we certainly have more people. The generational mortgae is on the way get over it already.

Mr W Jones, Liverpoool, England

Peter in Perth: I have to laugh at all these commentators who think that falling house prices will help people get on the 'Housing Ladder'. Let me explain. The reason house prices are falling is that people cannot get credit. If you are a struggling buyer, you might be able to find a property at a lower price, but you still won't be able to buy it, because banks (in their new guise as prudent, cautious lenders) won't lend you enough money.

It's no use property prices dropping by 30% if your capacity to borrow has dropped by 40%. No, I'm sorry Peter, but there's no silver lining here for prospective buyers.

Frank, London, UK

If the banks refuse to pass on the interest rate reductions then why is the BoE capitulating to their demands for cuts!!!!? (Answer: impotent and/or incompetent. Broon "appealed" eh? I can just see him Oliver Twist-a-like saying "Please, Sirs..." to his bosses)

Maybe Gorgon and Merv should have some balls for a change and tell the banks "pass them on or no more cuts and definitely no more cheap funding from the taxpayer!". Maybe a nice bit of Pavlovian conditioning is what the city needs to slap some sense into them. The BoE lets them act like spoiled children that stop their feet until they always get their way, even though it's *their* mess we are all having to wallow in now (any decent person would be slinking away in shame and embarrassment rather than demanding a ladder to let just them out of the hole and to hell with everyone else they pulled in with them).

Why stop at 40000?

Andy Von Myles, Edinburgh,

"Even it does happen current unemployment rates are at their reported lowest - circa 800,000"

Jonathan, London,

That figure only takes into account people on unemployment benefit, which you need to have already paid into the system to qualify for. It doesn't include the many people falsely claiming disability benefit (not all of the recipients of this benefit of course, but a large amount), and it doesn't include those who have never worked at all.

If you really believe only 800,000 people in this country of employment age are out of work, you're either a government stooge, or you're deluded, possibly both ;-)

Alex, London,

the question is: who cares?

riccardo, brussels,

Sally from London, I agree with you entirely. The thought of a bunch of braces-wearing loudmouth City boys ending up in the poor house doesn't exactly make me cry into my keyboard.

John Tee-Rhodes, Manchester,

I came to the UK several years ago because employment prospects in the Netherlands were dire. Looks like I'll be returning home again though to avoid this mess. On the plus-side, at least pensions are well-looked after in NL and the working hours are less!

Jan de B., London,

The state of the economy is as follows:

- Record high petrol prices
- Record high gas prices
- Record high electricity prices
- Housing market near collapse
- Unemployment at high levels
- Redundancies: 4000 in banking, 40000 estate agencies to close
- Markets low and very nervous
- Interest rates in a mess. Although there was an interest rate reduction recently, some banks raised their interest rates. I don't remember this happening before.
- Inflation, they try to convince us is 2.5%.

How can it be 2.5% when the price of petrol, gas, electricity are at record levels, the price of food has risen dramatically, council tax the same.

Local elections are not far away now.

derek, blackburn, uk

Perhaps I'm being simple, but has this entire financial fiasco been created from nothing? Individuals used to invest in companies to help them progress/develop. If the company did well, that investment was rewarded by financial return. If the company did badly, the investors lost their money. Simple. Banks lent money to those that could afford it, if they defaulted on payments regularly, they lost the asset they had purchased (or went to debtors prison). If you can't afford something, don't buy it. Simple. Now, lenders lend to people who can't afford it and investors speculate on specualtion. Now no-one seems to be willing to take a failed investment on the chin because they are so far removed from the actual failure that its 'not their fault'. They complain so loudly that the government steps in to help. Stop!!!! Market forces are not working here. The only people suffering are those at the bottom of the food chain. Ban speculation - bring back reality.

David L, Brussels,

This government has got no money to sort this mess out. America and other countries are cutting and refunding taxes, reducing interest rates dramatically, using their reserves. Britain has no reserves. It has all been wasted in a huge splurge on eye catching initiatives and social engineering.
Brown must go. This man sold our gold reserves at the very bottom of the market, despite advice. It's time we sold him. I don't think we will get very much.

David Nammory, Liverpool,

Hey! If its going to happen now is the time to get the christian churches and all of the welfare groups on line to ease the pressure on those loosing the jobs.
Dont leave it to the last minute. Get the churches on line if you see collapses coming. God blesses society through the churches. Ask the street people. Dont they just love the Salvos and their outreach vehicles and the christian church soup kitchens.

Graeme Gibson, Sydney, Australia

This government has spent far too long sucking up to bankers and business leaders and look where it has got us. It is now time to start looking after the ordinary people of this country. I am sick of hearing the reasons why company directors have salary increases many times greater than the workers; why non-doms are so imporant to the economy that they need not pay tax like the workers; why politicans feel justified in fiddling their expenses becasue they think they are worth as much as a city banker; why bankers and the city elite are so important to the economy that they too must be helped out at all costs. They are all in this together and it sickens me. Time for a change.

Chris, Oxfordshire,

There is no point in having low interest rates if taxation is high, whereas interest rates are flexible Labour and its taxation policy is not with the burden now at 40% plus of peoples income.

steve tea, manchester, cheshire

So the banks are now turning on their own employees as well as the rest of us to boost their profits. The banks really need to become more accountable. Where is the FSA when it should be taking action?

Still if 40,000 do get made redundant then I guess they will all get generous payoffs and will probably go out and start spending which will help

Even it does happen current unemployment rates are at their reported lowest - circa 800,000 so another 40,000 won't make much difference particularly when you consider that a reported 3+ million were unemployed in the early 90's.

Jonathan, London, England

reply to Mark, St Leonards, E Sussex

"Real work for real people"

you mean like a chinese factory worker, working in poverty to provide you with cheap goods? Or the Ethiopian farmer being paid "fair trade price" but unable to feed his family? Or perhaps you mean the hardworking civil servants, who work flexi-time, retain final salary pensions, and retire five years earlier than most.

I think your either being naive, or romantically left wing if you think the strength of your arms should determine the amount you earn....now where my hammer and sickle...

Adam, London, UK

The government tells us it knows, that its policies are viable, planned for the long term by minds immeasurably superior to our own. So how did it come to this? Did the government know and plan for this? If they knew why did they take no action to prevent it? If they did not know, then why not?

This slump coincides with various tax measures being introduced by the government which act as a disincentive to operating in London and an incentive for high wealth individuals and corporations to relocate to friendlier, more enlightened regimes. Is that competent management?

Alternatively, and by definition more likely, this is as big a surprise to Brown and Darling as it is to everyone except a select few in the know. In which case, can we have no more please of we know best from government.

Ubi, Edinburgh, UK

The UK has far too many people employed in selling debt, so this cull of 'City' jobs will be beneficial in the long run. Retail job losses will be primarily in those companies which have benefitted from too much easy credit being available to customers. There will be fewer plasma screen tellies being sold this year and less similarly debt-financed 'home improvements'

If it wasn't obvious four months ago to most people, it certainly is now, that the BoE's rate-cutting frenzy is benefitting no-one except the banks and building societies, which are cutting their savings rates while continuing to raise their mortgage rates. The base rate cuts have had a devastating effect on Sterling with the resultant inflation of approx 2.5% per month on food and fuel.

Paul, Coventry,

Maybe bankers, who got us all into this mess ,will go back to banking.Instead of highly dubious and speculative financing.
The bonus culture and payment structure must be changed.Bankers should have to wait for years before they can actually receive their bonuses.That way ,it will ensure any risky new products they come up with ,will have to be profitable over time.If not,they will have they bonus clawed back.
This will also deter rogue traders and any other scoundrels.
It is about time our government and supposed regulators got off their grace and favour filled backsides and started protecting those they are actually paid to look after,you and me!

James, London, U.K

Agree with Peter. There is a silver lining. House prices need a reality check in order to get affordability for the next generation. This is always cylclic. The financial institutions and city employees have had the good years and now must suffer a little like everyone else.

Hamad Lone, London, England

believe in the power of the people

Harry, Wuhan, China

And the silver lining of this mess...house prices will drop and those unfortunates struggling to get on the housing ladder - including our children - will, maybe, hopefully, get their opportunity.

Sadly too many people think high house prices are a "good thing". They are not, and the sooner the world educates itself to that fact the better.

peter, Perth,

I have no doubt that the economy will benefit from 40,000 fewer jobs in the City. It will be better for all the rest of the 'real' economy where we are actually doing real work for real people rather than just skimming off money from the top of everybody else's hard work. Tough but true.

Mark, St Leonards, E Sussex

Unemployment may be looming large in the private sector, but what the public sector? We know that one in four employed persons work for the State. In the past eleven years Brown has dealt with, or avoided, the question of unemployment by enlarging the State payroll. Salaries, pensions and expenses in the State sector will continue to snowball regardless of this recessionary downturn and the cost to the country will be crippling.

Richard, London, UK

4,000 estate agents out of work? 40,000 investment bankers redundant?

I'd like to be the first to pledge a fiver to support these unfortunates.

Sally, London,

Trouble is if you've been out of work a lot of recruitment agencys and employers can't "see" that unemployment is growing and that getting work is extremely difficult. From experience of being out of work most recruitment agencys and employers use your unemployment against you. They don't offer you an interview or job because they blame you for being out of work...... But if no one will offer you a job........ how can you get a job ? ......... but no one believes you and no one gives you the break you need. Instead they give work to people who are already doing the very job/s you apply for, but those guys don't need the jobs as they already have those jobs........It doesnt add up but the above really happens and people out of work suffer by having their whole lives, careers and futures destroyed by the above discrimination.

J Sira, London, UK

if the banks make redundant all those responsible for getting us into the sub-prime mess, with all it's clever debt and mortgage products, why should we worry? They never created true, sustainable, economic value anyway. Those living by the sword should also perish by it... long live the free market...

Paul, Manchester, England

Didn't people say the housing crash of the early 90's was caused by high interest rates and high unemployment.The situation is diffferent today but,in my opinion,more scarey.We may soon have high unemployment,but we certainly will not have interest rates as high as 15%.However,we have very high levels of debt,and if you multiply the debt by the interest rate,perhaps we effectively have higher interest rates now in relation to average growth in take-home-pay?

stephen hulton, eure, france

It's an inevitable consequence of the uncontrolled immigration encouraged by the current government combined with a total collapse of fiscal control inherited from the chancellor Brown era, the first driving an uncontrolled surge in house prices and the latter a distorted form of pre Brownite economics which uses misleading and contrived economic data to present a distorted picture of the current and future situation, which is clearly at odds with the reality of the present situation.

Ian Johnson, Ramsgate, UK

Given that the economic fundamentals are now in a far more deleterious state than they were in 2000, the suggestion that, in the long-term, the job losses will be less than in 2000 ought be met with some scepticism.

James E. Petts, Burnham, England