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London’s edge over New York eroded
By John Willman, Business Editor

Published: February 28 2008 21:52 | Last updated: February 28 2008 21:52

London is losing its status as the world’s leading financial centre and being overtaken by New York, according to a global survey of finance professionals.

The collapse of Northern Rock and the proposed tax crackdown on non-domiciled residents are making the UK less attractive to overseas businesses, according to the City of London Corporation, which commissioned the survey.

A separate survey, also commissioned by the City, said the UK tax system had lost its competitive edge over other financial centres. The UK had become increasingly unpredictable and uncertain, complex and unnecessarily aggressive in its approach to taxpayers, it found.

Thursday was the last day for submissions to the Treasury on the government’s plans to charge non-doms £30,000 a year if they wanted their overseas income to remain outside the UK tax net after seven years’ residence.

City leaders have already warned that the proposals, which include a crackdown on offshore trusts, will provoke an exodus of foreign investors and professionals who have contributed to its pre-eminence as a financial centre.

The CBI said the proposals were ill-conceived and damaging, sending out a message that Britain was no longer an attractive place for foreigners to work.

The Global Financial Services Index, compiled from questionnaires completed by 1,200 financial services workers around the world, said London was still the leading financial centre.

The index rates cities on factors such as property costs, regulation, taxation, the supply of skilled staff, the responsiveness of government to business needs and the quality of life.

However, its lead over New York had halved over the last six months – and questionnaires returned since the second index was published in September showed New York outstripping Londonn.London was rated top based on all returns since the survey began 18 months ago, with 795 points to New York’s 786. However, the 411 responses since the September index showed New York’s score as 46 points higher.

Offshore centres such as Jersey and Guernsey had become more competitive, as had Shanghai, Dubai, Qatar and Bahrain.

The second survey on tax competitiveness found that business leaders in London believed the UK’s tax framework has become less competitive at a time when many other countries were reducing their tax rates.

Ireland, Switzerland, the Netherlands, Bermuda and Singapore were judged to be more attractive, while the UK tax regime now seen as increasingly unpredictable and uncertain.

FT.com / World - London’s edge over New York eroded
 

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I think the concept of "financial center" is changing so quickly that much of it is simply anachronistic. If you go where the money is, Dubai and Hong Kong are two of the more vibrant players but Hong Kong, like NYC and London are pricing themselves out of the market.

The current financial sector shakeup will be the defining period for most of the next decade for these cities. NYC has a lot of leverage and momentum going for it but the new money and new technology doesn't know or care about that.
 
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