Square Mile will benefit from regulation: report

The 59-page report, entitled UK International Financial Services: The Future, a report from UK-based financial services leaders to the government, has concluded that the City of London can continue to lead the world in financial services.

Last June the Financial Services Global Competitiveness Group, co-chaired by Alistair Darling, the chancellor, and Sir Win Bischoff, former chairman of Citi, was tasked with examining the medium to long-term challenges to London's continued success in global financial markets.

The report revealed the findings of this study.

Sir Win said: "International financial services are not a zero-sum game: progress in one country need not come at the expense of another. It is strongly in the UK's interest to build on its existing relationships with capital markets around the world, especially in the emerging economies.

"The timing is right as the financial landscape is changing around the world and we must make sure world class centres like London participate and benefit from this trend."

The report explored the contribution of regional financial centres, noting the majority of financial sector jobs were based outside the City of London, providing employment for hundreds of thousands of workers in regional economies including Edinburgh, Leeds and Bristol.

It also argued the UK-based industry must seize opportunities to help meet the financial services requirements of businesses and citizens in emerging markets, such as China.

The report highlighted the importance of a long-term approach to raising the game of the UK's skills base, tax environment, innovation and promotional efforts to ensure the financial services sector was well positioned to play a role in meeting the future economic opportunities of the UK and global economy.

The report stated: "However, we need to look carefully at how financial services as a whole will react to long-term global trends; the major challenges these pose; to the changes brought on by the current banking crisis; and to how the banking sector in particular restructures itself. Corrective actions are being taken."

Mr Darling said the Treasury would publish proposals for strengthening the regulation of the financial services industry next month.

He said: "Building on that we need to plan for the future. Britain has been a world leader in banking for centuries. Financial services will always be an important part of our own economy and not just in London."