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Boris Johnson was holding crisis talks today over fears that London could lose its position as the global financial capital of the world.
The Mayor warned that London was in danger of losing its place because of new laws.
Mr Johnson was meeting MEPs in Brussels over plans to introduce new European regulations on hedge funds and similar businesses, designed to make risk-taking in banking less easy.
He was warning that, because the majority of such businesses in Europe are based in London, the UK will suffer most if they leave for New York, Singapore and other financial centres.
It would mean the UK losing out on the £3billion in tax revenues raised by the sector for major infrastructure improvements and public services.
The EU directive on Alternative Investment Fund Management will bring in stricter measures than are in place in the rest of the world.
Mr Johnson said: "In London alone, the private equity and venture capital industry directly employs around 7,000 people and we estimate a further 35,000 people are employed directly and indirectly by hedge fund managers.
"I have always said I'm in favour of proportionate regulation, where necessary, and that this industry must learn from the mistakes of the past and work to put its reputation beyond dispute.
"However, I strongly feel that this draft directive should be amended to ensure that we do not cut off a vital supply of investment funding at a time when the economy needs it most.
"The directive, as it is currently drafted, will have enormously damaging consequences for London, for the UK, and for Europe.
"There is no suggestion or evidence that investment funds were in any way to blame for the financial crisis and it is difficult to see the justification for this level of regulation."
Mr Johnson was raising concerns in meetings with London MEPs, Jean-Paul Gauzès, who is the European Peoples Party co-ordinator for the Committee on Economic and Monetary Affairs, and Timothy Kirkhope, Leader of UK Conservative MEPs.
It follows a backlash by Mr Johnson last week who described plans to impose fresh taxes on the City as "crackers".
Financial Services Authority chairman Lord Turner stunned ministers and the City by saying that international competitiveness should not be a major aim of the capital.
His ideas include a global tax on every financial transaction and using the cash to help poorer nations.
Reader views (2)
The problem is that the EU, "represented" by its notorious, unelected, uncontrolled, unaccountable and corrupt "European Commission" has developed a dictatorial and totalitarion attitude towards all EU member states and its citizens.
The solution for the UK to this manmade problem is an immediate, unilateral and unconditional cancellation of its EU membership. I am confident that quite a few other nations might follow:
-The Netherlands,
-Denmark,
-Czech Republic
-Ireland
-Italy
I was a great supporter of European integration some 10 years ago. Now I am disillusioned by this cynical and totalitarian PC monster, which calls itself "Europe" and appears to become more and more a colony of the US.
- Black Prince, London SW3, 02/09/2009 16:43
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This is what our 'European Partners' have wanted for some considerable time and it is not just the financial aspect they want to denigrate and control. The envy of the status of UK can hardly be disguised by the French and others.
The motives are racism pure and simple, we can well do without the EU and the very very huge cost it is to the UK.
- Frank, Home Counties, England., 02/09/2009 10:51
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