21.3.2011
By Simon Miller
A government advisor has warned that action is needed to maintain London’s edge over global competitors as it once again comes top in a global index for financial markets.
Chairman of the UK government’s professional and business services group and senior partner at chartered accountants Kingston Smith, Sir Michael Snyder called for effective and proportionate regulation and a reduction in the top interest rate or risk losing out to Asia competitors.
“There has been much more ‘heat’ than ‘light’ on the need for ‘more regulation’ in the wake of the economic crisis, but 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,” he said.
He added: “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.”
London kept its top spot in the Global Financial Centres Index (GFCI9) ahead of New York and Hong Kong. The report noted: “These three centres control a large proportion of financial transactions (approximately 70% of equity trading) and are likely to remain powerful financial centres for the foreseeable future.”
However, the report warned that London could not “rest on its laurels” as recent surveys have shown that 43% of financial professionals have considered or are considering leaving London while 11% are definitely departing or are likely to do so soon.
Snyder commented: “Whilst GFCI 9 shows London remaining at the top of the index, the research clearly indicates that uncertainty over tax and regulation is a major concern to financial institutions based in London or indeed those contemplating being here.”
With the budget on Wednesday (23 March), many in the City are looking to see what Chancellor of the Exchequer George Osborne will do to help alleviate institutions that have been battered by the crisis and hit by new regulations, taxes and attacks from media, public and politicians alike.
Newspaper reports have already suggested that HSBC and Barclays could move their headquarters out of London – a claim so far denied by both banks - and commentators wait to see which, if any, of the major investment banks up sticks to Asia or Switzerland.
Snyder concluded: “The Government, regulators, professional, financial and trade bodies should be bold and innovative in the measures that are needed to keep the City internationally competitive."
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