Unsettled London climate puts off business

Businesses considering whether to relocate are being deterred by London’s unsettled regulatory framework and perceived propensity for “banker bashing”, a study suggests.

Meanwhile, individuals considering location choices are focused more on tax rates and a sense that the real growth opportunities are in Asia, according to researchers from Ipsos Mori sponsored by the City of London Corporation.

The researchers interviewed senior financial services professionals around the world about why they opted to move business and staff.

They found that New York and London remained highly desirable as financial centres, particularly in terms of availability of local talent and proximity to clients. London also scored well for its legal system and timezone.

However, Asian centres such as Hong Kong and Singapore are drawing increasing numbers of younger bankers, lawyers and accountants who put more emphasis on career advancement and lower taxes. Over the long term, that could threaten London’s pre-eminence as a financial centre.

“It would be dangerous for us to ignore the young and mobile. These people are the energetic innovators and we need them onshore rather than offshore ... We’ve seen it in other areas like engineering,” said Stuart Fraser, chairman of the City of London’s policy committee.

However, the study found that widespread regional growth in Asia, which has seen financial services boom in Chinese cities such as Shanghai, could dilute the threat to London and leave it and New York with unchallenged concentrations of business.

The study is the first in a series of qualitative research papers the City of London is commissioning. It recently dropped its sponsorship of the Global Financial Centres Index. London has traditionally dominated that survey, which ranks big cities twice a year, but its lead over New York and Hong Kong has slipped in the past couple of years.