Is the City finished?

Matthew Lynn on whether the City can rise again to the challenges of a new world order.

It's been a terrible year for the City. Half the British banking system has been nationalised, and the other half doesn't look safe yet. The non-domicile tax rules that made it a magnet for Europe's brightest young financiers have been curbed. There are tough new rules on the way bankers are paid being proposed by the Financial Services Authority (FSA).

And now presumably on the principle that you might as well finish a job once you've started it the government has lifted the top rate of tax to 50%. It would have been hard to think of a more deadly blow to an already wounded financial centre. The City has re-invented itself several times in the past, and can no doubt do so again. It can find niches in stockbroking and financial restructuring, and build on the UK's historic ties with rising economic powers such as India. But the challenges will be immense and there can be no certainty that the City will be able to rise to them. Its standing in the world has taken a terrible series of blows.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.