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Is the future financial?

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Barclays Bank has posted annual pre-tax profits for last year of $5.9bn - a fall of three percent. The bank also announced that its bonus pool for its investment arm has been reduced by a third, and that a ceiling of £65,000 has been imposed on cash bonuses.

Stuart Fraser from the City of London Corporation told the Today programme's Evan Davis that, despite the large headline profit at Barclays, times were still hard for the financial sector and that had implications for everyone:

"We have difficult trading conditions because of the eurozone, and everything else, at the same time as banks are being squeezed because of capital requirements.

We had a severe credit crunch last year and were bailed out by the central banks. We are now seeing another credit crunch emerging and this is very bad for what people will call the real economy."

But the General Secretary of the TUC, Brendan Barber, says banks need to refocus their business model and invest more in British manufacturing to help rebalance the economy.

"At the height of the boom in 2007 before we hit the Northern Rock problems our banks were investing 16 times more in buying derivatives from each other than they were investing in the whole of British manufacturing.

"And, I think we need to see some pretty big structural change in our banking and financial system. I mean the Vickers Report was about making our banks safer - trying to address the problems of systemic risks. But, the real debate has to be about how we, we actually change their focus so they really are about serving the needs of the real economy, channelling investment into long-term sustainable wealth creation."

The corporation of London contacted us to clarify the fact that job losses in the city were 27,000, not 270,000 as claimed in this item.


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