Earlier this week, UK regulator the Financial Services Authority issued a wide-ranging report by FSA chairman Lord Turner which examined the causes of the credit crisis and proposed far-reaching changes to the supervision of financial institutions.

According to CEBR chief executive Douglas McWilliams, the Turner Report fails to make sufficient distinction between banks which are deemed “too big to fail” and other institutions, and therefore proposes tight regulation for all financial firms. Stricter oversight would, Mr McWilliams asserts, lead to an exodus from London to other more flexible regulatory regimes.

The Turner Report’s attempts to prevent this rely on the proposals for the UK being copied elsewhere, but in Mr McWilliams view governments tend to follow their own self-interest at home - regardless of what they may say at global conferences.

“A wide range of financial authorities, from the Irish through the Swiss to the Middle East, would jump at the opportunity of having the City of London decamp to their own financial service centres,” he said.

While Mr McWilliams anticipates that the Turner Report’s proposals will be largely rejected, he believes that the uncertainty created by this highly publicised document “will have a cost.”