BRITAIN’S status as a leading global financial centre is under threat as the vast majority of the country’s financial services sector believe that the UK has lost the competitiveness that had turned the City into an international financial hub.
According to the latest quarterly survey of the financial services sector by the Confederation for British Industry (CBI) and PriceWaterhouseCoopers (PwC), 85 per cent of firms believe the UK is no longer as competitive as it once was, up from 79 per cent in December.
The results of the survey come ahead of tonight’s three-way debate between George Osborne, Alistair Darling and Vince Cable on who would make Britain’s best Chancellor after the election. It will be broadcast at 8pm on Channel 4.
It also comes weeks after the Global Financial Centres report cut London’s rank to level pegging with New York, making London no longer the world’s leading financial sector.
Concern about the legislative burden is at an all-time high in the industry with 74 per cent of firms seeing regulation as a constraint on business over the next 12 months. Among banks this figure rose to 90 per cent and among security traders to no less than 87 per cent.
The CBI’s chief economic adviser Ian McCafferty said: “There are concerns about quite where regulation and legislation will be going with respect to this industry.” Many now believe that an unduly harsh environment will deter firms from expanding their operations in the UK and may push some companies to relocate entirely overseas.
Writing in today’s City A.M., Lord Mayor Nick Anstee says: “Unfortunately, we are now in a position where high earners, including financial sector workers, are being specifically targeted through taxes such as the higher rate of income tax and the increase in stamp duty on all homes costing more than £1m.
“This has led to fears that London is losing ground to other financial centres as the centre of choice for the biggest firms and their top performing employees,” he adds.
In an interview with City A.M., Andrew Formica, CEO of Henderson Global Investors, said: “London has been badly damaged. But it can recover. It has a good location, and a breadth of talent. But it needs support from government and regulators. It needs clarity on tax and regulation. I hope that will happen after the coming general election.”