Hong Kong gains ground on the City

THE government was warned yesterday not to risk London’s position as the world’s largest financial centre as a report showed the City and New York losing ground to Hong Kong.

Hong Kong has now joined New York and London as one of the “Big Three” financial centres for the first time, according to the latest Global Financial Centres Index, while Singapore was ranked as the fourth largest.

Launched in 2006 the eighth bi-annual report, conducted by Z/Yen Group, ranks 75 global financial centres based on senior industry figures’ perceptions of each.

The report prompted Stuart Fraser, policy chairman at the City of London Corporation, to warn that uncertainty over UK tax policy and future restrictions on pay and bonuses could “combine with a less hospitable business environment making it difficult for firms to recruit the staff required to meet their corporate objectives.”

Fraser added: “The City understands the need to minimise risk and to repair the damage to our public finances but we must also seek to retain a business environment that allows London to continue to attract the top firms and the top talent from around the world.”

Hong Kong has steadily closed the gap to London and New York over three years reflecting the rampant growth of the Chinese economy. Projections suggest the economy will have grown by seven per cent by the end of the year.

Those financial centres, which have fallen down the index include Jersey, the Isle of Man, Bermuda and the Cayman Islands all of which have suffered as a result of intergovernmental regulatory action jeopardising their position as tax havens

Fraser’s remarks come a week after the London Stock Exchange warned government proposals to merge the UK Listing Authority with the Financial Reporting Council would damage the City’s competitiveness as a global financial centre and ultimately costs jobs.