London could lose its status as the world’s top financial centre because of the ‘serious threat’ posed by rival cities, according to leading finance experts.
A report commissioned by mayor Boris Johnson found that more business-friendly tax and regulatory regimes in Dublin and Luxembourg have diverted £420bn of investment funds away from the capital.
Bermuda’s attractive regulatory framework and 0% corporation tax has seen its insurance market gain 700 jobs from London since 2000 with a loss of £450m in taxes to the Exchequer.
The report by Bob Wigley, chair of financial advice firm Merrill Lynch for Europe, the Middle East and Africa, along with a panel of senior city executives and representatives of the City of London Corporation, found that the capital is also under attack from the United Arab Emirates.
It said the Dubai International Financial Centre is aiming for the same stature as New York, London and Hong Kong, backed by a government setting zero tax on income and profits and resulting in the licensing of 750 financial services companies in under four years.
Singapore’s strategy to turn its local financial centre into a regionally significant player has seen it attracting over 1,000 domestic and international financial institutions to become a regional leader in financial trading.
The report said London was suffering from a burden of domestic and European regulation, deteriorating skills levels, and strained infrastructure. It was also concerned about congestion at Heathrow, which is nearing capacity.
London needs to take a far more proactive approach to protect its status, the research said.
It called for a rebuilding of the UK’s reputation for leading global financial regulation and the creation of a professionally-led board to promote London as a financial centre.
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