Firms could quit the UK to escape a necessarily tougher regulatory system

The loss of financial institutions may be the price the UK has to pay for a stronger regulatory system, the Labour Party conference heard this week.

Lord Liddle, special adviser to Tony Blair when he was prime minister, told a conference fringe session on financial services that a tougher regulatory framework may lead to some companies quitting the UK.

“The financial services could then return to its right and proper place in the UK economy,” he said.

Nottingham MP Chris Leslie, who is standing as a candidate for the soon-to-be-announced shadow cabinet elections, warned Labour not to demonise the financial services sector.

“I don’t want the Labour Party to get into a situation where the financial services are seen as evil,” he said.

The debate came against a backdrop of concerns that Labour will lurch to the left following the election of Ed Miliband (pictured) this week as Labour leader.