London 'no longer best finance hub'

The latest Global Financial Centres Index compiled by London-based consultancy Z/Yen has suggested that London is no longer the world's best finance hub, having been knocked off the top spot by perennial rival New York.

While the English capital was still able to maintain second place ahead of Hong Kong and Singapore, with the likes of Zurich, Geneva and Frankfurt tailing well behind, it is nevertheless a worrying sign for financial institutions in the city.

Professor Michael Mainelli, executive chairman of the consultancy, pointed out that New York's minor lead is relatively insignificant, suggesting that the real story is how well the two Eastern cities have developed their position since the index's inception.

However, he admitted that London needs to maintain its reputation if it is to continue to attract new businesses, particularly as it conspicuously lacks the kind of large domestic economy helping the likes of New York and Hong Kong.

The whole British economy will suffer if London does not maintain its status as one of the bets places for financial deals to take place, predicted Professor Mainelli.

He highlighted regulatory failures, uncertainty over EU membership and Scottish independence as factors in the capital's reputational drop-off.

Other changes are taking place, he added, with European centres outside of Switzerland struggling to maintain their growth - for instance, Dublin dropped down the rankings once again and is now in 66th place, behind the likes of Panama and Hamilton.

Chris Cummings, chief executive of finance advocacy group TheCityUK, expressed some concern at the results and pointed out that international hubs such as Hong Kong are becoming increasingly influential.

"The UK needs to vigorously engage with other EU member states now to make Europe a more competitive place to do business.  The centre piece of this work must be policies that are focused on stimulating sustainable economic growth and creating high-value jobs," he concluded.