Spend! Spend! Spend! London is the new plutocrats' paradise

From frenzied bidding for art worth £400m to a stampede for fine French wine, London is in the grip of an unprecedented spending spree fuelled by £9bn of City bonuses and an influx of super-wealthy foreigners.

The capital has long vied for the title of the world's wealthiest city but it will this week cement its status as the boom town of a new monied elite with a seemingly unquenchable thirst for conspicuous consumption.

Britain has become a magnet for a select group of high rollers - international billionaires who are choosing London above competitors such as New York and Dubai to make their homes.

Forbes magazine, the bible of the wealthy, revealed that London now has 23 billionaires, including the highest number of non-domiciled tycoons in the world. Together, they have a combined wealth of more than £45bn.

Nowhere is the flood of affluence more clear than in the auction houses of Bond Street, which by tomorrow are likely to have enjoyed the most lucrative sales week in their history.

Works from artists including Francis Bacon, Andy Warhol and David Hockney are being offered by Sotheby's and Christie's and are expected to push takings from the traditional February sales week beyond £400m for the first time.

Sotheby's, which set a record on Monday for its single biggest London auction when one sale took £94.9m, said the results were being fuelled by wealthy Russian and Chinese buyers.

Melanie Clore, deputy chairman of the auction house, said: "The results provide clear evidence of the depth of the market - the buyers are informed and considered private collectors. We are very, very happy, if a little bit tired."

Such is the fevered nature of the London art market - prices for contemporary art have quadrupled since 1996 - one dealer said it had reached "the point of absurdity". The American-based Richard Polsky said: "I would be a seller right now - especially if I had a blue-chip work."

The emergence of this rarefied world of nine-digit bank balances - far removed from the daily lives of all but a handful of Britons - has its roots in the strength of the City and London's unashamed attempt to offer a haven to a new class of what the cognoscenti call UHNWIs - ultra-high-net-worth individuals.

A welter of takeover activity in the Square Mile, which is eclipsing Wall Street as the centre of the global financial services industry, and rising share prices last year produced a record £8.8bn for its workers. Some 4,000 bankers, lawyers and traders received bonuses of more than £1m, triggering an avalanche of spending in areas from premium property to lavish dinners in top restaurants.

Their spending power has been coupled with that of super-wealthy individuals who have opted for what Forbes refers to as London's "ecosystem" of tax breaks, discreet financial markets and swaths of hyper-expensive real estate.

Alongside high-profile magnates such as the Indian steel tycoon, Lakshmi Mittal (worth a reputed £14.8bn), and the Chelsea owner Roman Abramovich (£9.1bn), the capital now hosts 11 foreign billionaires.

Paul Maidment, an analyst for the magazine, said: "London still attracts the elite of the world's rich and successful. And it can lay claim unchallenged to one title: it is the magnet for the world's billionaires."

Economists claimed that the "billionaires and bonuses" culture had a trickle-down benefit for Londoners - sustaining a support system of bankers, lawyers, gardeners and a rash of elite concierge services providing for every whim of the rich, such as providing a dozen albino peacocks for a party at three hours' notice.

But others highlighted the distorting effects of such spending, in particular sky-high property prices. Yesterday, Britain's most expensive apartments, four penthouses overlooking Hyde Park, went on the market with a reported asking price of £84m each.

The high-octane nature of London's economy, which has a greater proportion of highly-skilled jobs, also means it has a lower employment rate than the rest of the country - 69 per cent as opposed to 74 per cent.

Dermot Finch, director of the Centre for Cities, part of the IPPR think-tank, said: "We have got a dual economy in London. On the one hand we have the über-wealthy who are doing very well but you have almost a third of those of working age who are not getting jobs.

"The presence of the super rich is a good thing - they are a function of London's status as a pre-eminent capital for finance. But further efforts are needed to connect everyone in London to the jobs that are available."

In the meantime, it seems the tills will keep ringing.

Wine merchants in the capital were among those yesterday struggling to keep pace with demand which has seen prices for prestigious clarets and Burgundies from the much-hyped 2005 vintage double in a year. Amanda Skinner, chief executive of the 150-year-old merchant Lay & Wheeler, said: "It's the very rich who want to buy the best and are not worried about the cost."

Money, money, money...

Jewellery

Demand for all that glitters - from gem stones to platinum pendants - has risen dramatically. Theo Fennell, supplier of jewels to clients including Liz Hurley and Elton John, last year reported a seven-fold increase in pre-tax profits. Harrods has started stocking a pendant with 5,000 diamonds and 96 rubies. Yours for £144,000.

Wine

Prestigious clarets and Burgundies, from Petrus to Clos de Vougeot, have long been a favourite investment in the City but this year demand is far outstripping supply. Liv-Ex, a wine trade index, rose by 50 per cent in 2006 and Petrus, an iconic claret, is trading at about £25,000 a case - a level that has been described as "unprecedented".

Restaurants

Top-end restaurants are buying in foie gras and caviar as fast as they can sell it. The chef's table at Claridges, run by Gordon Ramsay, is booked up weeks in advance. A table for two at The Ivy can often only be booked at short notice with the help of a specialist concierge service.

Yachts

Brokers in Mayfair and Belgravia report record business for the ultimate rich man's toy to satisfy the 135,000 people in Britain with assets worth an average £6.4m. Sunseeker, the high-profile British manufacturer, last year had its fleet of 50 charter yachts fully booked - at up to £55,000 a week.

Jets

Airport security alertshave seen the private air market take off. The cost of £3,000 an hour is within the budget of the wealthy. One operator, NetJets, which pioneered the idea of buying shares in a jet, saw its flights increase by a third.

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