London brushes off downturn to stay top of financial centres

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Although New York is gaining on the capital in terms of competitiveness, many other financial centres have fallen behind — having suffered more from the economic turmoil.

Ian Luder, Lord Mayor of the City of London, said: "This shows that going around kicking ourselves isn't very helpful.

"If a storm blows down a tree in your orchard you have to adjust, but if you only have two trees in your garden it makes a bigger hole."

London is now on 781 points, 13 ahead of New York in the March Global Financial Centres Index which is drawn up every six months by the Z/Yen Group think tank.

Previously, Hong Kong, Singapore and Zurich had seemed to be catching up with the British and US financial centres, but they have lost momentum as the economic woes spread from the sub-prime mortgage problems.

Only Britain and America can boast to have "truly global centres", according to the research published by the City of London, and they have been boosted by a "flight to safety" in recent months.

The ratings, which the capital has topped since they started two-and-a-half years ago, are compiled using assessments of a number of factors including business climate, reputation, tax regimes and the supply of skilled workers as well as infrastructure.

London, though, has lost its lead as the world's top banking centre, with New York overtaking it on this score.

It is still number one for professional services, insurance, asset management, government and regulatory regimes. It had slipped down the rankings on the latter two because of the Government's actions during the Northern Rock crisis.

The top 10 cities have also stretched their lead on the bottom 10 of the 62 analysed, dropping nine points and 40 on average respectively.

The biggest faller among the big cities is Tokyo, down eight places to 15th, with Sydney dropping six to 16th. Vancouver and Montreal each jumped five places to the mid-20s in the table, with Jersey, Isle of Man and Guernsey also rising.