LONDON (AP) -- A few months ago, the British economy was sailing full steam ahead.Foreign funds flowed in, investment bankers pocketed record bonuses and ordinary Britons used soaring property prices to fund luxury spending. London was being touted as a serious rival to New York as the world's financial capital.
Then the global credit crunch hit. Commercial and private property prices began sinking and layoffs are starting in the financial sector.
The credit squeeze originated in the United States after the wave of subprime mortgage defaults, but is taking a heavy toll on Britain Inc. With its manufacturing sector a faded remnant of its storied past, Britain has staked its future on its massive financial services sector -- which is exactly where the crisis is.
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