The good news for Dubai is that somebody thinks it may overtake the City of London as one of the world's top financial centres.
London mayor sees threat from Dubai
The good news for Dubai is that somebody thinks it may overtake the City of London as one of the world's top financial centres. The bad news is that it is Boris Johnson saying it. Mr Johnson is the accident-prone, eccentric journalist who was recently voted mayor of London. While Londoners are adjusting to one of the sharpest economic downturns in the City's history, and suffering from a cold snap, you might expect the mayor to try to spread some good cheer. Instead, he is beginning to sound like Scrooge.
"Bah humbug," says Mr Johnson, or words to that effect. A report commissioned by his office said that financial institutions may leave London for places offering lower taxes, more attractive regulation and other incentives such as grants. "Other centres are simply more co-ordinated, more strategic and more aggressive," said Bob Wigley, the chairman of Merrill Lynch for Europe, Middle East and Africa, who led the panel of executives who wrote the report.
The report blamed aggressive competition from other cities such as Dubai, more EU regulation, unpredictable taxation, high living costs and transport bottlenecks. It made a number of recommendations including upgrading the City's infrastructure, improving regulation and establishing a new body to promote its role as a financial centre. "Whatever the mistakes of the financial services industry, and they were grievous... it is a fundamental and catastrophic mistake to believe that we can somehow afford to run down the City of London," said Mr Johnson.
The City employs 500,000 people, makes up 11 per cent of Britain's total income tax and 15 per cent of corporation tax. It contributed £42 billion (Dh236.09bn) in tax in 2007-2008. "We are seeing a shift to more regional financial centres instead of global ones such as New York and London," said Deepak Tolani, a senior associate at Al Mal Capital in Dubai. "Both London and New York have in the past led from the front in terms of product innovation, idea generation and capital flows. They are now suffering from the excesses of the past, and it will take them some time to recover from recent events. However, I would not discount them out for the long term."
* additional reporting by Sara Hamdan @Email:email@example.com