Why the City of London is right to fear Dubai

Senior figures in the United Kingdom government are increasingly concerned about the rise of Dubai as a financial centre and what it might mean for the future of the City of London.

They fear that a combination of huge oil surpluses in the Middle East and a relatively low-cost business hub, regulated with a common law legal system, may prove an irresistible lure to financial executives struggling with soaring costs in a global recession.

Last week Standard Chartered chief economist Gerald Lyons told journalists in Dubai that he had recently been in a meeting with senior members of the UK government where, for the first time in his experience, genuine concern over the mounting competition from Dubai as a financial centre was expressed "at the highest levels".