The Global Financial Centres report yesterday slashed its rating to equal that of New York. It is the first time London has been knocked off the top spot and will come as a warning to politicians desperate to trumpet the Square Mile as the world’s leading business hub. Some analysts are already speculating the survey could lead to new firms choosing to base themselves outside the UK.
London was one of only four major cities to drop points, falling by 14 to tie with New York on 775. Although the Big Apple took more of a battering from the financial meltdown, it was judged better for availability of staff and infrastructure.
London’s slip from the top was spurred by fears of a regulatory backlash and recent tax hikes brought in to plug the UK’s yawning budget deficit, including the 50p rate of income tax, the 0.5 per cent increase in national insurance and Alistair Darlings one-off banking bonus tax.
The biannual survey of financial professionals takes into account factors including how well-connected cities are, how their transport links measure up, the level of diversification in their services and the availability of quality office space.
Asian economies powered up the rankings, with Hong Kong and Singapore seeing double-digit increases to snap at the heels of the traditional financial champions.
Hong Kong became the favourite with insurance professionals – the first time any country has beaten the two big hitters. Asian economies are likely to continue their rise, with firms like Prudential desperate to tap into their rapid growth potential.
Stuart Fraser, chairman of the policy and resources committee at the City of London said: “Respondents have assessed the two leading global centres of London and New York as level on ratings for the first time – a fact which bears out our view that these two are the ‘twin sister-cities of world finance’. The evidence of the survey points to the continued high ratings for these two leading global centres and reflects the multi-faceted nature of their competitive advantage. They both have rich institutional and communication linkages across the world. These two leading centres benefit from good levels of mutual co-operation.”