‘London’s prime position as a financial centre is coming under increasing attack...’

Forces are building against the UK capital and its role as a global financial hub. Ironically, the latest salvo in the battle may well come about because of David Cameron’s attempts to protect the City at December’s European Union summit.

Mr Cameron’s veto of a broad European treaty to help combat the eurozone crisis was, in large part, due to a lack of concessions from other leaders on his efforts to insulate the City from proposed regulation.

But for many financial workers he might have achieved the opposite: threatened London’s long-term future as a financial centre.

That is because Brussels is working on a swathe of regulations on everything from bank capital and accounting firms to clearing houses.

By potentially being excluded from the debate, London’s position could become more precarious at a time when the rise of financial centres outside of the western world is already putting it under pressure.

The coming years will be crucial if London is to retain its top spot globally. Regulations look like they will be tougher in Europe than other jurisdictions, while Mr Cameron’s gambit raises the prospect that European leaders could choose to favour continental cities.

Already, the UK is preparing to sue the European Central Bank over rules that could force a London-based clearing house to decamp operations to the euro area.

More importantly, a number of cities from Asia and the Middle East are snapping hard at London’s heels. London, New York and Hong Kong remain the leading hubs, according to consultancy Z/Yen in its annual Global Financial Centres Index.

But Singapore and Shanghai in particular are threatening the ruling triumvirate in the latest rankings. The surprise is that behind these five come a host of more traditional destinations, such as Tokyo, Chicago and Zurich.

The highest-ranked Middle East centre is Qatar in 30th place while Dubai comes in at 36th, behind the likes of Montreal and Jersey.

Still, the threat from the new Asian centres is acute. UK-based banks, such as HSBC and Standard Chartered, have mulled moves to Asia because of new regulations and a number of government moves on tax and bonuses.

Many hedge funds operating in London have either set up offices in Switzerland or moved there altogether.

Just as strikingly, Schneider Electric, a large French industrial company, moved three of its senior managers, including the chief executive, from Paris to Hong Kong this autumn.

A City banker told me: “It’s just the beginning – I think you will see more and more top people move to Asia. And once the centre of gravity shifts, then maybe a lot of other things could move with it.”

To be sure, London still has a number of advantages. One, simply, is time zone. It sits in between the US and Asia and allows people to deal with both in the same day.

It also has a big “soft” infrastructure of services related to the financial industry, such as lawyers, consultants and accountants, that would take time to replicate elsewhere. Plus, it still retains its cachet as an exciting place to live, a big draw for financiers’ families.

What can be done if London wishes to keep its status? For some senior bankers, there needs to be less denigration of the City and a review of policies, such as the 50 per cent top tax rate.

But more than that, there needs to be an awareness of the rivals to the crown and an attempt to attract Asian business through initiatives such as off-shore renminbi trading.

The mood, however, after Mr Cameron’s latest move, is less than chipper. A US banker based in London says: “It is ironic that a government that has been one of the worst at supporting the City should finally stick up for it. And then doubly ironic that when it did it might explode in all our faces.”