It’s been a difficult time for City bankers, what with all the flak over bonuses and easy money after almost bankrupting the world.

The longest lasting row relates to bonuses and remunerations packages.

This hit the headlines a year ago, and was debated here with the arguments for and against.

A year later, and the argument still rumbles away.

Put “bank bonuses” into Google for example, and over TEN MILLION results are returned.

That’s 10,000,000.

That's almost a quarterly bonus for an investment bank's senior executive and obviously is something that causes a lot of emotion.

Most of the emotion is the resentment that someone is getting paid squillions for doing diddlysquat.

After all, it has been shown on many occasion that a monkey could get as good a result as most stockpickers, but that’s not the point.

The point is that the City traders who return the most profit to the bank get paid the most.

And everyone who is part of a team that returns any profit will get something.

Just a million maybe.

But something.

And if you don't pay it, then the team leaves lock, stock and two smoking cigars.

This culture is so ingrained that there are books about it, with my favourite being David Charters: “At bonus time, no-one can hear you scream”.

It’s a short book about “one man's quest for his annual bonus - in a world where ambition, terror, insecurity and desperate deeds are as natural as organic bread.”

Yep, that describes it pretty well.

The City is a cut-throat, testosterone driven world, which has been well documented in this blog, and elsewhere.

But let’s just look specifically at the UK issue.

The banks are paying bonuses that seem excessive.

The government is unpopular as they are blamed for the bankers’ excesses.

The government wants to therefore clamp down on any excess bonus payments.

But they can’t.

There’s the rub.

The UK cannot clamp down on bank bonuses, even with Alistair Darling’s damp squib of a bonus tax, because one country cannot act on its own on this issue. Not unless they want to lose their banking industry and see it all go overseas.

Apparently no-one believes that will happen, although Boris Johnson thinks it will.

Boris, the Mayor of London, claims that 9,000 bankers are likely to move out of London if there is a punitive singular UK tax regime in this space.

Equally, the Financial Times has discovered that many City banks and bankers are thinking about upping sticks:

"A couple of years ago colleagues of mine would say to me how much they loved London, what a great place it was to live," says a US-born banker at a European investment bank. "Now they're tired of being here. They feel under attack."

Trading is the most mobile investment bank business that could be shifted abroad. And while many banks have show-off, state-of-the-art trading floors in London - such as Bank of America Merrill Lynch's at their European headquarters behind Saint Paul's Cathedral - few would have any compunction about pragmatically shifting a portion of staff to more attractive financial centres.

"A quarter of staff could be easily relocated," says one European investment bank boss. He estimates that within six months, 5,000 to 10,000 City bankers could be shifted to another European centre such as Frankfurt or Zurich.

So what does this mean in reality?

The reality is that the UK cannot unilaterally restrict bank bonuses without losing significant tax and income across the UK.

First, if 9,000 bankers leave then that is 9,000 x (salary + bonus). In reality therefore, if each banker earns an average of £2 million or so all up, it’s a loss of about £20 billion to the UK economy and taxation of around £5 billion or more.

That’s a serious amount of income to the Treasury and commerce across Britain, and London in particular, that disappears up the spout.

No wonder the Evening Standard’s recent poll of Londoners found that 68% of readers feel that bumper City bonuses is good for London’s economy.

But it’s more fundamental than this.

If 9,000 bankers leave London, then it is also 9,000 x 4 jobs.

Each banker supports an infrastructure across London of accountants, lawyers, cleaning staff, receptionists, security guards, catering, bars, restaurants and more.  All of the support and infrastructure that services their offices and complex negotiations in other words.

So it’s more like 36,000 job losses rather than 9,000.

OK, the other 27,000 aren’t necessarily earning £2 million a year, but let’s say they average £20,000 per year, the UK’s average median salary (not London, UK).

This would mean a loss of a further £540 million in income, £100 million plus in taxation and a further 27,000 or more on the unemployed and social security benefit numbers.

Following on from this, wherever the bankers move to will also become a major financial centre and hence other firms might follow paving the way for a mass exodus, in worst case scenario.

In best case scenario, it would just mean that London loses its shine as a Financial Centre, which is threatened already. For example, HSBC has made moves for their CEO to relocate to Hong Kong and is listing on the Shanghai Exchange over the past few months, and many report that Shanghai will outshine London by 2019.

So all in all, the Treasury and Gordon Brown have a big challenge, and it’s not a simple one of cracking down on bonuses with a stupid media-pleasing bonus tax that, in reality, means nothing (the banks just changed ‘bonus’ to ‘salary’, and gave everyone a temporary three month £1m pay rise).

No, this needs co-ordinated global action which is why London is working very closely with Brussels, Washington and other economic centres to try to create a joint agreement on this thorny issue.

Without a joint agreement, one by the whole G20 (not just France and the UK), any action taken in London to limit bankers’ bonuses will be detrimental to the Treasury, the economy and the country as a whole.

The UK banking sector contributes significantly to the UK and its economy:

Employing almost half a million people with the wider financial industry employing over 1.1 million

Together with related activities (accountancy, business, computer and legal services, etc), some three million people rely on the financial industry for their jobs.

Banks and financial services contribute £70 billion to the UK's national output (6.8% of GDP)

Banks and financial services provide 25% of total corporation tax (£8 billion) to the UK Government

The value of foreign exchange business passed through London every day is £560bn ($1 trillion)