Margareta Pagano: Our brilliant City financiers? They're all tarts at heart

One of the City's most blue-blooded stockbrokers once told me there is a simple reason why London has been the hub of global finance for more than 300 years – British financiers are brilliant hustlers.

As well as being hustlers – my stockbroker friend includes himself – our City chaps are magpies because they beg, steal and borrow other people's inventions, and often reinvent them as their own and improve them. Add in the enthusiasm of a tart for taking even the tiniest commission in return for a trade, he says, and you have the secret to our success.

It's not a view you'll find in the history books. The historians put the Square Mile's success down to more prosaic factors – our time zone, language, the spread of empire after the industrial revolution and certain comparative advantages which led to the creation of the shipping and commodity markets. All this is true.

Yet it doesn't fully explain the dynamism of the City, or why it is still the world's biggest foreign exchange market, the biggest over-the-counter derivatives market, home to the biggest cross-border lending and the largest organiser of syndicated loans. Top this with insurance at Lloyd's, metals at the LME and oil at ICE. Now we have more than 80 per cent of all Europe's hedge-fund business being carried out on the west-east axis from Mayfair to Spitalfields. Not bad.

If you look more closely at how the City has grown, it's clear my stockbroker has a point when he says it's our hustling which has created such an extraordinary entrepôt. Take the forex market, now the world's biggest. This first modern international market kicked off in the early 1900s when dealers started using the nascent telephone system to trade currencies. In the early 1960s, traders adapted the currency-dealing system to deposits, leading to the money markets, which, by the end of the 1960s, led to the London inter-bank rate. When the US brought in its interest equalisation tax, bond traders in London invented the Eurobond market. In the 1980s, traders went to Chicago to learn about exchange traded futures, coming back to set up the Liffe market, one of the world's biggest futures exchanges.

But it was the City's Big Bang that really opened up London, bringing in international capital and liberalising the antiquated stock-jobbing system.

Like the futures market, the hedge-fund industry was invented in the US, but it took some of the UK's top financiers to really get it going, by bringing together the mathematical genius of French derivatives experts, the trading theories of US quants in London, along with the capital's openness to alternative investment strategies.

But Europe can't seem to bear London's success. That's certainly one of the reasons why the EU has launched its Alternative Investment Fund Managers Draft Directive which could, unless amended, have such a devastating impact on London's hedge-fund industry, but also on all non-European hedge funds. There's no doubt Franco-German jealousy is behind much of this proposed legislation, which is seriously flawed in parts, though there are good bits. But much of it was written post-haste after the crash, suggesting it is ill-informed rather than just born out of envy. If the industry, in the shape of the Alternative Investment Management Association, and politicians represented by Lord Myners, the City minister, push their case, they have every chance of getting the changes made. Who knows, Lord Myners, an ex-fund manager himself, may turn out to be a real City hustler.

What a coup – Barclays' £8.2bn sale of BGI whisks it from No 10's grasp

The utter determination of Barclays Bank to avoid government control has been breathtaking to watch. We saw one of the reasons why it's been so keen to stay out of No 10's orbit last week when it clinched the £8.2bn sale of Barclays Global Investors to American rival BlackRock. It's a spectacular deal on two fronts – it gives Barclays enough cash to bolster its balance sheet, finally nailing any doubts that it can survive without a bail-out. And it's a nice earner for staff. Around 500 employees of Barclays will become very, very rich men and women indeed, sharing about $700m (£425m). John Varley, Barclays' chief executive, Bob Diamond, the head of Barclays Capital, Rich Ricci (good name), chief operating officer of Barcap, and Blake Grossman, BGI's boss, take the lion's share. Diamond makes $22m or so, Ricci's even richer with $18.5m, while Grossman collects a mouth-watering $53m.

Barclays shareholders should also be pleased; the deal is expected to guarantee their protection from having to be answerable to the taxpayer. But there is a more fundamental reason Barclays was and is so desperate to stay out of government hands. Its board is convinced it can build an international investment and merchant bank to rival the mightiest of the Americans. That's why it has been so open to overseas investors such as China, and the Gulf states, which helped the bank perform the first rescue operation last autumn. It's why Diamond was so keen to pick up the Lehmans business in the US after last September's collapse, and why it's decided to sell the BGI jewel. Barclays knows that once the world economy picks up, there is huge potential for it to do investment banking business with the emerging Bric countries – Brazil, Russia, India and China.

Varley and his directors could not be free to chase that business if Barclays had thetaxpayer calling it to account, or No 11 telling it to lend to small businesses.

Absolutely fabulous M&S unveils recession-busting style

The recession really could be over once the public gets to see the new autumn collection now going into Marks & Spencer's shops. I got a peek at a sneak preview last week and I have to report that the clothes are absolutely fabulous, particularly the menswear, which will fly out of the shops. But the stars of the new collections are the vintage pieces, designed as a one-off to celebrate the chain's 125th anniversary, but which are so stylish they should become staples. Sir Stuart Rose, the M&S chairman and chief executive, was on good form and confided that he's already asked for a Harris Tweed jacket – with striped lining – to be kept to one side for him. But Sir Stuart was not so forthcoming about who is going to take over as chief executive, despite my best attempts to pry. For what it's worth, WH Smith's Kate Swann is still my favourite.