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Tax and red tape could kill London as a world centre, CBI warns

PUBLISHED: 07:00 09 December 2009 | UPDATED: 15:21 05 October 2010

TAX and red tape could tie London up in knots as a leading world city, the CBI warns today. A-quarter of the firms polled in its twice-a-year survey think London’s standing will shrink compared with New York, Paris, Tokyo or Mumbai

By Mike Brooke

TAX and red tape could tie London up in knots as a leading world city, the Confederation of British Industry warns this-morning.

As many as a-quarter of the firms polled in the CBI-KPMG twice-a-year business survey think London’s standing will shrink compared with New York, Paris, Tokyo or Mumbai, while half say it will simply remain where it is.

The CBI’s London director Nigel Bourne said: “Our reliance on financial services and fears about tough, international competition are leading to uncertainty about London’s future status as a world city.”

A perceived lack of Government action on an overly burdensome tax and regulation regime and falling public sector investment are seen as threats to its attractiveness as a place to invest, according to today’s findings.

Richard Reid, London Chairman of KPMG, said: “We’re facing challenges not just from the tough, economic conditions, but from newly-emerging financial centres.

“There’s real concern of a regulation backlash that could make the City less attractive to overseas investors.

“Policy makers need to ensure they don’t hamper London’s ability to compete with other global centres by rushing in a raft of new rules which ties businesses in knots.”

Yet the CBI-KPMG survey offers a glimmer of light with businesses more optimistic than they have been in 18 months.

Their poll of senior executives shows 86 per cent still think London is a good place for business, compared to 80 per cent when the last poll was carried out.

The good tidings for Christmas come 24 hours after employers reported “positive hiring intentions” for the first time since last winter, in a recruitment services survey of 2,100 companies.

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