Rapid responses

Open for business?

[Re: Will the City struggle to retain its position as the world’s financial centre? Friday]

It is important that London retains its status as a major international financial centre, but it faces many challenges. London has always been seen as an automatic choice of location for foreign banks, but there are concerns that it may be moving from an automatic choice to a considered option. It is a challenging time for banks anywhere, but many factors are influencing their choice of location. Firstly, regulation: the dangers of regulatory arbitrage are increasing as global centres seek to attract financial and related professional services business. The benefit from consequential employment by this sector cannot be ignored. Secondly, taxation: corporate fiscal revenues from the foreign banks in the UK have run into the billions of pounds in recent years, and they are an attractive boost to a nation’s economy. More tax-friendly regimes, with a certainty of fiscal legislation, can appear attractive. Thirdly, immigration: a huge number of non-European nationals are employed in this sector and it is important that the UK is seen as open for business and “visa friendly” to these influential inward investors. The position of the UK outside the Schengen Agreement on European free movement makes the UK less attractive for investors looking to expand throughout Europe.

John Treadwell, chief executive, Association of Foreign Banks

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