London has retained its position at the top of the global financial centre rankings, but it now shares first place with New York.
The capital’s rating fell from 790 to 775 in the seventh Global Financial Centres (GFC) report, the second largest drop of any city. The twice-yearly report takes into account the factors which persuade businesses to locate in 75 financial centres around the world, measuring categories such as business environment, general competitiveness and infrastructure.
London and New York are now level in the ratings for the first time. Hong Kong is in third position, while Singapore and Tokyo are also ranked in the top five. Athens, Istanbul and Reykjavik were ranked in the bottom three of the financial centres rated.
In the latest report, written by London-based consultancy Z/Yen, New York overtook London in the business environment, people and infrastructure categories.
The levels of corporate and personal tax paid by high earners and fears over a regulatory backlash against financial institutions were the main concerns voiced over London’s competitiveness.
City of London Corporation policy chairman Stuart Fraser warned against complacency over the capital’s falling ratings.
Fraser said: “Evidence from other commissioned research is that the comparative tax and regulation ‘offer’ of London as the leading global financial centre in Europe needs to be carefully considered by policymakers in the UK and the EU.
“Proposed measures to address fiscal deficits and to put in place new frameworks for regulation and supervision of financial services need to be transparent and commensurate with the objectives sought,” he said.
“There are important questions for us to explore with policymakers to ensure that a progressive reduction in fiscal deficits retains the confidence in the UK economy as a competitive location for an international financial services sector that last year contributed £60bn in taxes, 12 per cent of the total UK tax take.”
London, New York, Reykjavik, Dubai and the Cayman Islands were rated as the centres most likely to be feeling the impact of the financial crisis. The authors said London and New York received “substantially more mentions than any other centre”.