London’s City now tied with NY

London and New York are level in the Global Financial Centres Index compiled by Z/Yen for the City of London Corporation for the first time because fears of “a regulatory backlash” and taxes cut London's score by 15 points.

“London has dropped 15 points in the ratings, from 790 to 775 points – the second largest drop in scores. New York has overtaken London in three of the subindices: Business Environment, People and Infrastructure,” the report said.

“London and New York still lead the field although the gap between them and the third placed centre has been steadily cut from 81 points a year ago and 45 points six months ago to just 36 points now.

Backlash

“The main concerns voiced about London’s competitiveness are the fear of a regulatory backlash that limits the freedom of financial institutions and the levels of corporate and personal taxation that may drive high earners abroad.

“New regulatory arrangements are also a concern in New York, and the loss of skilled personnel to the industry is a concern of respondents in all the leading centres.

New York and London are suffering most as a result of the current financial crisis, the report said.

London falling

“London has fallen by 15 points in the ratings and although New York has seen a rating increase of 1 point, this is against an average increase of 23 points. Hong Kong received fewer than 20% of the mentions of New York while Singapore received fewer than 10 mentions overall, the report said

“One effect of London’s relative decline in competitiveness is that other leading European financial centres are catching up with London. Frankfurt was 141 points behind London six months ago and is now 115 behind while Zurich was 114 points behind and is now just 98 below London.

“Similarly, London’s lead over Paris and Geneva is less significant than it was six months ago.