The decline and fall of financial centres used to be determined by war and peace. Today, it is more a matter of relative levels of regulation and tax. So the European Commission’s proposed directive on alternative investment fund managers, with its cumbersome registration and disclosure requirements for hedge funds and private equity, raises a serious question about London’s position as an international financial centre.

The draft legislation is not devoid of logic. Its declared aim is to address systemic risk. And, in the fluid modern financial world, it is important that all institutions, whether banks or non-banks, should be properly regulated if they have the potential to torpedo the system.