If yesterday and the day before were all about curtailing banks and bonuses. Today is all about whether this is a good idea.

The Telegraph says it’s not. In article transparently titled, ‘The UK is not yet ready for the demise of finance, it points out that manufacturing currently accounts for less than 2.5m UK jobs and that 600,000 jobs are going in the public sector over the next four years. To assume that manufacturing can compensate for both the loss of these and for the loss of millions of jobs in financial services is, says the Telegraph, ‘to descend into madness.’

Separately, the Economist’s Bagehot column makes an interesting point, claiming that:

…one shorthand description for the New Labour boom years is: Gordon Brown let a deregulated City rip, then used the tax revenues to fund a dramatic expansion of the state.

Last week’s release from The City UK suggests there might be something in this.

Not only did public sector employment increase by 800,000 between 1999 and 2009, but from 2000 (or so) onwards, financial services’ share of GDP increased dramatically.

Equally, Gordon was responsible for the formation of the FSA in 2001 (coincidentally around the time financial services revenues went through the roof). Even Adair Turner said the FSA helped fuel the banking crisis after being encouraged (by the government) to operate according to a ‘light touch’.

Source: TheCityUK

TheCityUK’s research also shows that the total tax take from financial services declined in 2002 and 2003 before peaking at 30% in 2008. In 2010 it predicts 24.1% of all UK income and corporation tax receipts will come directly from financial services.

It may, therefore, be reasonable to conclude that – yes – the UK would be stuffed without the City.

However, Felix Salmon is determined not to leave it there. The esteemed US blogger points out that:

if you’re addicted to the fiscal crack cocaine that is City taxes, that’s a reason to give up those taxes – it’s not a reason to keep on going back for an extra fix…

And says that:

The problem here is that so long as the City remains dominant in the UK economy, other sectors of the economy and regions of the country will never be able to attract the smart labor it desperately needs.

This is very true. But it’s also true that the disappearance of jobs in the City won’t automatically lead the appearance of high skilled manufacturing jobs in Birmingham. In a predictable continuation of the crack metaphor, the too-rapid withdrawal of the cocaine of City taxes will simply lead to major withdrawal symptoms and possible fatal fiscal palpitations.

Nick Clegg and Vince Cable are demanding that London becomes the world’s most transparent financial centre. (Financial Times)

Banks WILL pay less tax this year than last year. (Channel 4)

Why is all our fury directed at Bob Diamond and the ‘fat cat’ bankers? (Independent)

As to be expected because your average bankers IQ greatly exceeds that of your average regulator or politician, bankers are back to their old tricks. (Fintag)

Top traders still earn more than brain surgeons, architects, generals and law firm partners. (Bloomberg)

UK’s green investment bank may be based in Edinburgh. (Bloomberg)

Three directors behind Paulson Europe have shared an estimated 13m despite the unit’s 37% fall in profits in the year to March 2010. (Telegraph)

Do not be deceived by the internal alterations and new forms of reporting put forward by Goldman Sachs. At its heart, the problems in our banking system are about insufficient equity in very big banks. (BaselineScenario)