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London was today declared the leading financial centre in the world despite the global crisis which has battered the City and turned bankers into pariahs.
The World Economic Forum said the UK has overtaken the US, putting the capital ahead of New York at the top of the leaderboard of the world's leading financially focused countries.
But it also found deep underlying problems in the UK, which was ranked an embarrassing 37th out of 55 for financial stability, behind Panama, Bangladesh, Nigeria, Poland and Colombia.
The UK was 44th in terms of currency stability and 45th in banking stability. In management of public debt Britain was 39th, highlighting the need for spending cuts and tax rises to slash the level of Government borrowing.
The financial crisis saw the UK's score drop nearly 10% this year but it was less than the 12.5% drop in the US and put Britain and London on top.
Australia pushed the US into third place while Singapore came fourth. Report co-author Nouriel Roubini, the New York University professor dubbed Dr Doom for predicting the financial crisis, said: “The change in scores does demonstrate the implications of the downturn on our assessment of the long-term development of financial systems.”
Kevin Steinberg, of the World Economic Forum, said: “The UK and US may still show leadership in the rankings, but their significant drops in score show increasing weakness and imply their leadership may be in jeopardy.”
Britain's reliance on finance helped to push it to the top of the table but also showed why the UK has been hit harder than many other developed nations by the recession.
Nick Batsford, a broker at Hobart Capital, said: “The City gets a lot of stick, but we do good things. It's not our fault the economy is skewed towards finance. But one of the reasons it is like that is because we are skilled in this area.”
London came top in mergers and acquisitions expertise, insurance and capital markets and second in banking services.
David Buik, of BGC Partners, said: “In some respects the fact that London is the leading financial centre is not surprising as London is the centre of the time zones and financial services have been attracted to the shores for the past 30 years.
“But we have neglected manufacturing output and industrial production for 12 years and backed financial services to the hilt. It will cost the UK in terms of economic activity.”
Lord Mayor of London Ian Luder said: “We must not do anything in the tax, regulatory or administrative areas which damage the conditions that keep our financial centre first class.” City of London Corporation chairman Stuart Fraser said: “London is the EU's financial hub and like all other centres suffered during the crisis but it is beginning to show signs of recovery. However, we cannot afford to ignore the threat from rapidly developing countries as economic activity grows in Asia and Latin America.
“In one sense this report is not helpful because it could lead to complacency. Regulation, infrastructure and other issues will all need work.”
Money makers: London and Sydney have relegated New York City to third place on the leaderboard with Singapore fourth
Reader views (14)
Well done Gordon Brown?? Keith Price - are you blind?
Our country is in a total financial MESS because of Mr Brown. Wake up!
- Essie, London
The report addresses countries -- not cities. It ranks the UK -- not London.
- Richard Rogers, NY, NY
The big question is, can he pull out the unemployment or not.
- Shujath, Hyderabad, India.
Haha at the comment by Bojo the clown's mate !
All this shows is that traded volumes have fallen least in London, and bankers are running to wherever their accountants tell them to.
- Madmax, London
In the 80's the country was set on this path. We don't have a manufacturing industry since. Thatcher's big bang set the ball rolling. People do business here cos of less regulation. I thought it was a bad idea at teh time, we have lived through an unprecedented boom because of this - hence Gordon being able to cut borrowing to 40% GDP and spend alot (possibly not well). I never thought we would have such wealth created by this - Thatcher could have been right.
However this lax regulations - helped seed this crash and public borrowing has shot up again.
We are right to protect the city, its too late to change it now we have burnt our bridges. Don't agree with it but we are too far down that road.
Only time will tell, if the exaggerated boom outweighs the exaggerated bust or vice versa. Or the more stable French/German model is best. Whats for sure is the Eng/USA model has produced big returns in the boom cycle.
As for Gordon, like him or not. He produced the plan on the wednesday, that will go into history. We were close to RBS going under on Tuesday, that would have started a run on all banks and hence a 1930's style depression. We were so so so close.
The new battle will be French/Germans wanted more regs to stop it happening again - they are right!! However as a Londoner we have to fight to maintain our gambling city culture.
- Bob, london
Peacemaker - Your intelligence is there all to see - "hole" Freudian sip or are you just as stupid as your comments.
- Alan London, London
The UK was 44th in terms of currency stability and 45th in banking stability- yet 1st as world financial hotspot
Just shows what a load of complete idiots and twaddle the banking and investment system has become
Wake up world
- Peter, Moscow RF
Bozza for PM. If he can achieve this in London, what could he do for the UK as a hole?
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Gordon Brown achieved this - not Boris
- Keith Price, Luton England
At last, a bit of good news about Britain's economy, and isn't it amazing how London and these three great cities - all formerly part of the British empire - still rule the business world! This is the sort of news article that makes the French and Germans green with envy.
- Matt, London
Bozza for PM. If he can achieve this in London, what could he do for the UK as a hole?
- Peace Maker, Battersea
Richard Kennard - are you daft? Gordon Brown saving our country from recession - what nonsense!
- Marcus Newman, London
What a distinction: the UK is now the home of the biggest thieves' kitchen in the world. Once we made things; now these overpaid parasites in banks and hedge funds cream off the wealth created by honest workers. Their greed and ego led them to the reckless incompetence that debauched our economy. Why don't they all go to New York and finish off the US economy? But perhaps there's no need - Obama, ever Wall Street's poodle, is doing well that without their help.
- Richard Kennard, Welling
Is this a good thing?
- John Polenski, Parma, Italy
Well done Gordon Brown for rescuing the country from the worldwide economic recession, which has hit many other countries far harder than it has us here in the UK
- Keith Price, Luton England
