Northern Rock travails take toll on London's reputation

What a difference 18 months and a credit crunch makes! A year and a half ago the City was on a high while Wall Street was bracing itself for the effect of the sub prime mortgage crisis and the failing US competitiveness in financial services.


Now both financial centres are suffering through thousands of job losses and a high profile collapse – the UK’s Northern Rock and Bear Sterns in the US.


But it appears that London has had more to lose;


"The brand of London has taken a hammering because of Northern Rock," says Tim Linacre, chief executive of Panmure Gordon. "I don't think it is terminal, but London needs to be absolutely on its toes."

Players on Wall Street are promoting the pros of tight regulation, saying that many investors value watchful regulators, tight listing standards and the right to sue.

"What Northern Rock demonstrates is that a business-friendly regulatory system may have its disadvantages as well," says Kathryn Wylde, president of the Partnership for New York City, a business group.

Trading on the London Stock Exchange dropped 29 per cent to £4,000bn, according to the World Federation of Exchanges.