Fallout from bank will be felt across London

Property prices, jobs and pension funds will all feel the chilling effect of the investment bank's bankruptcy and the disappearance of Merrill Lynch, the other Wall Street giant. Worse will follow if more firms succumb as fears grew over the future of insurer AIG.

Bonuses: the City is braced for a meagre handout this winter. They will be little more than half the peak level of 2006 with a grim knock-on effect for almost every aspect of the London economy. Economic think-tank the CEBR had already downgraded its forecast for bonuses this year from £6.2 billion to £5.1 billion and now expects to reduce the figure again.

Chief executive Doug McWilliams said: "It is likely there is going to be a downward revision. All the inputs are down so it is very likely the bonuses will be down. And it is quite likely that a higher proportion will be paid in shares rather than cash."

The City's bonus pool peaked at £8.8 billion in 2006, sending the London property market into its final frenzied spasm before the post-Northern Rock turn last autumn. This year they are likely to be less than £5 billion, the lowest level since the dotcom collapse.

Perhaps less will be lavished on high living and more saved for the "rainy day" that many bankers now feel is perilously close.

Property: just when estate agents thought the London property market was starting to recover some poise, Lehman's demise has sent it back into cold storage.

Peter Rollings, of west and central London agency March & Parsons said: "In the last two weeks we had 135 and 143 new applicants and Saturday was genuinely very busy. Now we get this news.

"Sentiment is really bloody awful. We are in a tough market and we are in for at least another six months of toughness. There are still people who have their heads in the sand. They have got to grasp the nettle and take the offer that they think is ridiculously low. The only positive thing is that we are a further step closer towards the bottom."

The City support industry: the vast spending power of the banks, legal and accountancy firms in the Square Mile and Docklands supports a major industry of dependent businesses, from taxi firms to corporate masseurs. These will now all be feeling the pinch as budgets are slashed. Those that were directly dependent on Lehman, such as its Bloomsbury-based corporate travel company Hillgate Travel, will be the most exposed.

In the last downturn, in 2001, Goldman Sachs famously axed bowls of exotic fruit from its meeting rooms in what became known as the "kumquat cull". Some of London's most expensive restaurants have free tables, even on a Saturday night, for the first time in five or six years.

City jobs: with 4,000 jobs gone at Lehmans, a further 4,500 at Merrills in doubt and deep cuts coming at most other City banks, the credit crunch shake-out will run to tens of thousands of jobs. After all the years of huge salaries and bonuses many will be locked into huge mortgages on trophy properties and private school fees.

The knock-on effects will be felt from the second home market of Cornwall, where prices are already plummeting, to the shooting estates of the Scottish Highlands. Alexandra Andreae-Jones, at headhunters Financial Professionals, said: "There are massive opportunities for candidates to go abroad, particularly to the Middle East and Asia."

Savings and pensions: hardly anyone in Britain will be immune. There are no suggestions that a major British bank is in trouble and savings up to £35,000 are protected by a government guarantee. But according to Aon consulting, Britain's 200 biggest defined benefit company pension schemes now face a £35 billion shortfall, compared with "just" £26 billion on Friday.