‘City scandals dent UK economic recovery’

The economic adviser said recent research from think-tank Z/Yen, showing that New York has overtaken London as the world’s financial hub, was a black spot in otherwise “good macroeconomic news” emerging from the UK.

Ms Lea said: “The decline in London’s position appears primarily to reflect the reputational damage inflicted by a succession of scandals. And it is clear from this survey that London’s reputation is under close and critical scrutiny.”

She said that London has been hit harder than other centres by scandals over the manipulation of the London Interbank Offered Rate and foreign exchange market rates, partly reflecting its larger market share.

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Ms Lea added: “A drip-feed of damaging stories poses a threat to the City with the EU crackdown on bonuses another factor.”

However, Andrew Sentance, senior economic adviser at PricewaterhouseCoopers said that the latest rise in UK GDP, which the Office of National Statistics revealed was 0.8 per cent, puts Britain on course to become the world’s fastest growing developed country this year.

Adviser comment

Keith Churchouse, director of Surrey-based Chapters Financial, said: “We must be careful that London’s crown as financial capital of the world does not slip any further. But even more importantly, we must not devalue currency, in which I have great faith. Sterling is arguably strong compared to other currencies, but there is room for improvement.”