London is now the world's leading financial centre, rankings published today by the influential World Economic Forum reveal, in a report that will surprise those who have warned the UK's financial services industry is under threat from international competition.
The WEF's Financial Development Report, which ranks 55 global financial centres on more than 100 criteria, said that London had now leapfrogged New York, which took the top spot in the survey last year. In fact, the United States has fallen to third place behind Australia, while London's leading European rivals, in France and Germany, have fallen out of the top 10 altogether.
Based on the WEF's criteria, the total score of most developed nations fell sharply following the credit crisis, though the UK slipped less markedly thanks to what the WEF described as "the relative strength of its banking and non-banking financial activities". Developed nations closed the gap on their Western counterparts.
London's promotion to number one position in the rankings will be seized upon by the British Government, which has been criticised for its treatment of the financial services sector. There have been repeated warnings in recent months that hedge funds and others plan to leave the UK because of higher tax rates and increased City regulation.
However, Kevin Steinberg, the WEF's chief operating officer, said the biggest lesson of the survey was that while "the UK and US may still show leadership, their significant drops in score show increasing weakness and imply their leadership may be in jeopardy".