For long, hedge funds managers have continually been listening to politicians and officials, and they seem to be voting with their feet. Over the past 3 years, more than 50 London hedge funds have been abandoned in the country or, like Brevan Howard and BlueCrest, two of the largest funds, have set up branch offices in countries which impose lower taxes.

The main reason for going out of the country seems to be pretty obvious - the latest 50% rate of tax. This tax will attract no sympathy from the rest of the general population either, as it would mean rising taxes and cuts to public services.

London's position as the hedge fund capital of Europe is now threatened by the feeling in the industry that the Government and regulators are no longer on its side.

What might help hedge funds in their battle against a proposed European Union directive which looks to introduce tougher rules in the industry, is the fact that the Financial Services Authority recently found out that these funds do not pose any risk to the financial system, despite all the criticism that has been thrown their way.