Why more Scottish financial services talent could migrate to London

As Scotland's financial services sector begins to come to terms with the latest redundancy announcements within its two biggest banks, it's been dealt another blow - the effects of the crisis could be permanent.

Within the last week, RBS has announced a further 3,700 job cuts, and Lloyds Banking Group unveiled 5,000 more cuts - 1,000 of which will hit Scotland. As the Scottish government continues to pick through the pieces of the banking crisis, one former RBS economist has suggested Edinburgh is losing its status as a financial services centre.

Jeremy Peat, RBS's former chief economist told a banking inquiry at Holyrood that the "centre of gravity" had shifted from Edinburgh to London, and that it could be permanent.

"Come what may, we're likely to have lost a great deal of the benefit of having two major head offices - I worry about that," he said.

As well as the implications for employees within the institutions themselves, Peat says that it could also affect business services areas, such as legal advisory work and "high-quality accountants".

The fall from grace of Scotland's financial sector was illustrated in the latest Global Financial Centres Index (GFCI) released in September.

Edinburgh had slipped by seven places to 27th, while Glasgow slumped to 49th - 18 places lower than the previous GFCI publication in June.

"Of the 75 cities in the index, only eight have seen a drop in average assessments of 10% or greater since it began in 2007 - and two of them are in Scotland," said Mark Yeandle, lead author of the report.