To keep its position as the world's leading financial center, Britain will have to better integrate the global financial services industry into its economy and develop a strategic partnership with other financial centers.

In a report to the government, top professionals in the financial field proposed a number of policies and initiatives, to keep Britain's financial services competitive over the coming 10 to 15 years.

The report warns Britain against resting on its laurels and advantages in the financial sector, which cannot guarantee its continued prestige as a world financial services leader.

The report entitled "UK international financial services – the future" was published on Thursday by the Financial Services Global Competitiveness Group (FSGCG), co-chaired by Chancellor of the Exchequer, Alistair Darling, and former Citigroup chairman, Sir Winfried Bischoff.

Its release comes against the backdrop of the most severe global financial crisis in generations, which began to take its toll last autumn.

The report calls on the government and industry to recognise that the country's status as an international financial center depends on the maintenance of an open economy and cooperation with other financial centers.

MEETING CHALLENGES

The financial services industry plays a vital role in Britain's economy, employing more than 1 million people with their economic value per head, more than double the national average.

The industry accounts for around 8 percent of the country's output, and contributes almost 14 percent of tax collected, helping to fund much-needed public services.

Proposals in the report aim to reform the industry and restore public trust by addressing the deficiencies revealed by the banking crisis, and to rebuild the reputation of banking.

"We must work together to learn the lessons, here and internationally, and reform regulations. But we need to distinguish between what has worked, and what needs to be strengthened and improved," Darling said.

The report said it is important "to acknowledge that the international financial services sector has been a major contributor to the wider UK economy, and we envisage this remaining the case in the future."

It said the sector is facing challenges, because major financial services firms are growing out of the emerging economies, small-scale innovative financial markets - such as carbon markets - will achieve critical mass, and the number of world class financial centers will rise.

Britain's financial services industry can continue to be a world leader only by working as a genuine partner of British businesses and emerging economies, while embracing the need for global regulatory reform, the report said.

Bischoff said that arguably the financial services sector is one of those industries, like media, pharmaceuticals and biotechnology, where Britain had a competitive advantage "but as events have shown, we cannot be complacent."

The report highlights immediate and necessary improvement in a number of areas, and the all-important aspect of government and industry co-operation on strategies and implementation.

LONG-TERM POLICY GUIDANCE

"The UK's long-term approach to international financial services needs to be sufficiently robust to withstand challenging and volatile conditions, such as those we face today," the report said.

It said the government and the industry should establish a clear direction for Britain's international financial services industry in partnership with the wider economy.

"There should be openness in sharing regulatory insights and regulatory exchanges with other countries and regions," the report said.

It also strongly urges Britain to take a leading role in the formulation and implementation of global and EU regulations.

Strong and purposeful engagement between the government and the industry is key to ensuring that Britain's tax system remains stable, sustainable and competitive in the long run, the report said.

It said flexible labour markets, enhanced skills, and training should be highly valued.

The report said the government should encourage overseas talents by ensuring that the immigration points system attracts people with financial services skills.

MAKE IT A SUCCESS

The success of the prescriptions in the report will be measured by the number of high value jobs in Britain, and by its contribution to the country's overall economic growth, the country's leading business organisation CBI (Confedration of British Industry), said.

"Britain's future competitiveness will depend on its ability to develop strengths in knowledge intensive, high value sectors," CBI director-general, and the report's author, Richard Lambert, said.

"As the (financial) sector consolidates in the face of financial pressures around the world, international firms appear to be choosing the UK as one of their preferred bases," Lambert said.

"There are obvious reasons for that choice," he said, citing the English language, the workings of the legal system, the geographic position between Britain and Asia, the clusters of first class support services, long-standing international networks and the very large number of active foreign firms in the country.

"All of these qualities, and more, add up to assets which are invaluable, and must be cherished," Lambert said.

"Without the right approach in areas like infrastructure investment, regulation and tax, they could drift away over time," he said.

(Xinhua News Agency May 9, 2009)