LONDON - Britain's lucrative fund management industry faces tough competition from financial hubs such as Dublin and Luxembourg, with tax and regulatory burdens a key future concern.
An Investment Management Association and Corporation of London survey concluded the third-largest global centre for fund management - a 2.8 trillion ($7.2 trillion)industry - could lose assets and jobs to low-cost rival centres.
"Regulatory, tax or other concerns, such as physical congestion and poor transport ... could prompt an exodus of firms in the longer term," it says.
Asset management companies are major UK employers. The Centre for Economics and Business Research says staff at fund firms are expected to grow by 0.2 per cent in 2005 to 37,870. About 315,000 people work in London's financial hub.
Foreign centres have narrowed the gap on London in recent years. Assets in Luxembourg-based portfolios rose to US$1.5 trillion ($2.1 trillion) at the end of 2004.
"Luxembourg and, in particular, Dublin have seen substantial growth in activities associated with support and servicing of funds, and have developed as 'centres of excellence' in these activities," the survey says.
