Britain has already lost its top notch credit rating and is flirting with an unprecedented triple-dip recession.
But there are also growing fears London’s status as a banking and financial services powerhouse is under threat from a raft of regulations hatched in Brussels.
Professor Philip Booth, from free market think-tank the Institute of Economic Affairs, said: "This fear of the unknown is working against London.
"The danger is another financial centre could take London’s place."
But Booth added this could take a generation to happen, with rivals such as Hong Kong not having the stable political regime that would enable it to compete with London.
He added: "The pernicious aspect of EU legislation is, it seems, to be intended to promote protectionism and driven by ignorance and suspicion of those who make money from finance.
"The Financial Transaction Tax is also being used to discriminate against members and should be referred to the European Court of Justice."
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