Warning as London tops financial city list
Tuesday March 22 2011 | 06:32 AM

London has retained its crown as the world's premier financial centre despite fears of a clampdown on banking institutions, according to a major survey.

The UK capital beat New York, Hong Kong and Singapore for a successive year in the Global Financial Centres Index, a barometer of the business environment in 75 cities worldwide.

The announcement was however greeted with a word of warning from a senior UK government adviser, who claimed that firms may yet flee the capital for Asia or the Middle East.

Sir Michael Snyder, chairman of the government's Professional and Business Services Group, writing in the report's foreword, insisted UK-based businesses have concerns over tax and regulatory "uncertainty".

In reference to recent verbal attacks on bankers by senior British politicians, Snyder asserted there had been "more heat than light" over the need for more regulation.

He said: "I believe it is more important to have regulations and supervisors that focus on macro systemic integrity rather than excessive 'conduct of trade' detail that reduces competitiveness and actually hinders transparent and effective regulation."

"It is also crucial that we have clarity and certainty on taxation, as well as reducing the top income tax rate, otherwise businesses will not want to operate in the UK and will opt to set up or expand in cities such as Hong Kong, Singapore and Dubai."

The GFCI 9 survey, which is sponsored by the Qatar Financial Centre Authority, is compiled using more than 33,000 responses from financial services professionals.

It reveals that confidence has fallen since last year, with 47 centres having lower ratings than in September 2010. Just 25 centres have higher scores.

Eight Asian centres are in the top twenty with Seoul achieving the greatest increase, moving up 25 points to 16th place. Asian cities are also in the top six when organisations are asked in which jurisdictions they are likely to open new offices.

The top five centres rated as likely to become more significant in the five years are also all Asian - Shanghai, Singapore, Seoul, Hong Kong and Beijing.

Offshore centres have suffered however, with falls in confidence greater than average - only the British Virgin Islands is the exception.

Jersey and Guernsey remain the leading financial centres in the survey, which was first launched by the City of London.

The top destination in the Middle East is Dubai, though it only ranks at 28 overall, followed by Qatar, which has moved up four slots.

Dublin's fall from grace continues, coming in this year at 33rd, on a par with Stockholm.