Brown eyes London as world "financial capital"

New regulation centre to boost City profile

Monetary policymakers in the UK are seeking to capitalise on London’s growing stature as a global financial powerhouse, by introducing a wave of new initiatives to encourage further investment in the City.

At the second meeting of the Chancellor of the Exchequer’s High-Level Group on Financial Services, Prime Minister-elect Gordon Brown and economic secretary to the Treasury Ed Balls unveiled a raft of new measures to consolidate the Square Mile’s attractiveness to fund managers and Islamic investors.

Among the proposals under discussion is the establishment of a new International Centre for Financial Regulation to offer training on international regulation, with the intention of eventually influencing global financial policymaking. The British government has pledged £2.5 million to fund the scheme over the next three years.

In addition, a package of measures designed to increase the competitiveness of the UK fund management industry, by reducing costs for fund managers by £290 million a year, was also discussed.

“The pace of globalisation is accelerating, and no more so than in financial markets. Britain is a world leader in financial services, but it must never be complacent about the challenges ahead. Today we have taken further forward our discussions on what business, the City and government can do to both meet and benefit from the challenge of globalisation,” Brown said.

The High-Level Group also pointed to steps taken since its first meeting in October 2006, such as the reduction in the main rate of corporation tax proposed in the 2007 Budget, and tax changes to support work in the area of Islamic finance, as evidence of attempts to encourage further investment in London from both Western partners and the Islamic world.

“I believe that with the measures we have taken, London and the UK-based financial sector will continue to attract the best global talent, and to be a world leader for innovation, asset management, global regulation and Islamic finance,” said Balls.

The UK announcement came just days ahead of a meeting in Washington to propose measures aimed at addressing growing disquiet that US capital markets are being increasingly shunned in favour of local markets.

The plans laid out by the US Treasury, focusing mainly on the transparency and harmonisation of US accounting standards, seek to reassert New York’s position as the world’s financial capital.