[cajonnmu]

Sadly, the UK is in very serious trouble. Also, since regulation of financial markets is imminent, its one strong sector will be greatly eclipsed. It's really a shame.

I think we would be deluding ourselves if we aren't all in serious trouble, although by some measures it could be argued that the US is in a far more precaious position, ie the higher unemployment rate and the possible sector-wide collapse of the US car manufacturing industry.

Tougher regulation didn't and won't stop any cockups. Compare London's light-touch regulation to the more abrasive New York regulation, and I think you will find that it was New York that had to endure the Madoff episode, the capitulation of the entire US investment banking scene, and the collapse of its largest financial institutions (AIG/Citi). Even anti-anglo-saxon France had to succumb to the Kerviel affair at Soc Gen.

Also let us not forget that the advent of some sort of crazy 'global' regulation will only go to exacerbate the current economic climate by freezing flows of capital. Never mind the problem with putting theory into practice.

True, but we need more than mere hope. For example, if you consider all of the industries in France and Germany, they seem better poised for the future. Britain really only has finance and that was based on Thacher's derugulation/big bang. In fact, Britain was nearly broken in the '70s and had a short-term, illusory fix caused by Thacher's ill-fated deregulation. That is now over, and work will go from London to places like Shanghai. I hope that Britain reinvents itself, as it is my favorite country. It would be nice if Brown and Cameron offered concrete plans for the future.

I'd be interested to hear how France and Germany are better positioned, considering these countries elected leaders to try and bring about changes to their respective labour markets and adopt policies very similar to those brought about by Thatcher.

I also presume you are talking about the same industry that is so easy to move to the developing world?

The way I see Shanghai isn't as a competitor as you may view them - but as a business partner in a rapidly expanding market.

Shanghai will eclipse London as the world's No. 2 financial center within 25 years (if not sooner). Like NY, it is the financial center of an enormous economy. Moreover, it will become so huge and sophisticated that it likely will become dominant in all of Asia. (Some will try to compare the EU to the US, but the EU is not a country, and it's not even cohesive with respect to economic policy. Moreover, the Continent's suspicion of the Anglo-American model will benefit other regional financial centers like Frankfurt and Paris to London's detriment.)

With respect to the UK, I'm afraid that unless the government comes up with a plan, it will be reduced to a regional financial center like Frankfurt that also relies on tourism and film-making. I'd like to see Cameron offer proposals for the future.

Shanghai could very well become the number one financial centre, but I suspect it won't because (fortunately for London) financial centres aren't defined by the size of the population and/or the economy of the 'home' country.

Of course I do find it interesting what figures you are using to procaim that the UK has the largest/second largest economy to base your theory for correlation of financial centre strength.

Naturally the future is never set in stone, but London had the same question asked of itself after WW2, and then with the introduction of the €.