Gloom from U.S. financial crisis infects Europe

But even France — whose strong state involvement in the economy offers a measure of insulation — is not immune to the gloom. The finance minister has warned that mortgages will be tougher to come by as banks tighten lending. The media are feeding consumer jitters with stories about families struggling to get credit and French bankers in London fearing for their jobs.

The British economy is particularly vulnerable, thanks to a fast-deflating housing market, high levels of personal debt and a heavy reliance on the financial and business services sector, which accounts for more than 6 million jobs — or a fifth of all British jobs.

Lehman Brothers' collapse alone could cost 5,000 jobs in Britain. The HBOS takeover will see more go. Estimates of the number that could disappear in the City in the next year range from 25,000 to more than 100,000.

'I don't anyone is safe'
Tudor Taylor, 53, who works in financial services in London, said the mood in the City was "pretty bleak." He said the crisis had made him change his own behavior.

"I drive less. I consider major purchases to be major decisions. I've become more of a bargain hunter, and I look for discounts. I'm constantly asking myself, 'Is this a good price?' I'm more cautious, I've cut down on frivolous spending."

For now, some are keeping faith in the resilience Britain's august financial institutions.

"Until we see the collapse of Lloyd's of London, we won't panic," said Alan Booth, who runs a florist shop in the shadow of the 320-year-old insurance market's high-rise headquarters.

But Lehman Brothers was an institution, too. So was the 300-year-old Bank of Scotland, which merged with mortgage lender Halifax in 2001 to become HBOS and will now see its venerable name disappear as it is absorbed by Lloyds TSB.

"I don't think anyone is safe," said Allsopp, the IT worker. "I spoke to a friend at HBOS two days ago, and he just laughed at me when I said I'd heard the rumors."

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