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London’s global competitiveness under threat, says report

London’s position as a globally competitive financial centre is under threat, an independent review commissioned by London Mayor Boris Johnson concludes.

The review, led by Merrill Lynch chairman for Europe Middle East and Africa Bob Wigley, was conducted by a panel of industry experts including Aviva chief executive Andrew Moss, Fidelity International president Simon Fraser and Lloyds chairman Lord Peter Levene.

The panel proposed a range of measures to reverse the capital’s decline as a global centre, including measures to improve the competitiveness of the UK’s tax regime.

The review called for foreign dividends of UK-based companies not to be taxed when repatriated to the UK, annual benchmarking of the UK’s tax competitiveness and exemption of foreign branches from UK tax.

The review also proposed a more competitive corporation tax regime and clarification of the definition of residence for companies with operations in the UK.

Wigley says: “Over the past two years however, London’s position
has been threatened by the rapid development of Middle Eastern and Far Eastern economies, the targeted strategies of other financial centres and
New York’s reassessment of its own competitive position.

“More recent developments – Northern Rock, the Non-Dom and Corporation Tax consultations, the Icelandic bank and Lehman Brothers collapses – have struck at the heart of confidence in London.”

He adds: “I very much hope this report will inform the longer term
review being conducted by the Chancellor’s High Level Group (the chairman of which I have kept closely informed of our work) and that our policy recommendations will be aggressively pursued.”

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