Worries grow over Britain's future as a global centre for finance
Warning that international business is being put off the UK by red tape and tax
Friday 09 November 2012
An amber light is now flashing over the attractiveness of the UK as a place to set up and grow financial and related professional-services firms, the leading body promoting the country to such businesses warned yesterday.
TheCityUK, headed by Sir Stuart Popham a former senior partner of legal giant Clifford Chance, said that while there has not yet been an exodus of staff, "the deteriorating position of the UK relative to other financial centres is starting to have an impact and urgent action is needed before a tipping point is reached".
Sir Stuart, the chairman of TheCityUK Competitiveness Steering Group, said: "We can no longer assume that international businesses will want to come or stay in the UK. At a time when our economy should be capturing the maximum possible share of emerging-market growth, there are concerns from business over the direction of travel our country is taking with financial services."
In a 48-page report entitled Driving Competitiveness, TheCityUK analysed decisions on where they should be based made by 147 financial services firms in recent years. Of the decisions analysed between 2006 and 2012, 56 per cent were made against the UK and only 25 per cent in favour, with the remainder being put on hold.
Sir Stuart said: "For companies to make positive location decisions, we must give them confidence in the future and I would encourage Government to create this sense of confidence that the UK is a global hub for financial services with a clear vision of the part it wants the sector to play.
"Those who make changes to regulation, tax and policy on infrastructure investment must recognise the growing importance their decisions will make for jobs, economic growth and tax revenue as the actors decide where to locate."
TheCityUK report calls for a more certain financial regulation environment, more competitive taxation and a commitment to improve the UK's infrastructure. It also says the Government must make clear its commitment to the European Union which 40 per cent of the firms taking decisions about where they were based cited as a core reason for choosing London.
The report said that between 2006 and 2012, a net 22,000 full-time jobs in financial services had been lost as a direct result of changes in competitiveness – that is a quarter of the total fall in overall headcount. But it added that a further 63,00 jobs went as a result of this in the financial services supply chain and because of lower spending caused by unemployment.
The financial and professional-services sector employs more than 2 million people and accounts for 13.5 per cent of Britain's gross domestic product.
Chris Cummings, chief executive of TheCityUK, said: "Location decisions are now a standing item on the agenda for board meetings and the decision to invest in the UK is one that remains in the balance for a number of significantly sized financial-services firms."
He added: "At a time when other parts of the world actively seek to grow their financial-services sectors, our Government must focus on those discretionary elements it has some control over.
"The opportunity is there to ensure that the UK remains the pre-eminent location for financial-services companies, but to achieve this Government will need to play a significant role in enhancing the appeal of our economy for financial-services companies."
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