The City of London found itself at the centre of intensive political attention yesterday as Gordon Brown invited 32 of its leading figures into the Treasury for discussions while David Cameron used a speech to indicate that eliminating the stamp duty charged on share transactions would be a priority for him. There are, though, 364 other days of the year during which politicians across the spectrum neither fully appreciate nor totally understand the contribution that financial services make to the capital and the country.

The past few years have been a comparative feast for London. US markets have become less appealing places in which to operate as intrusive legislation, enacted in the wake of financial scandals, has proved a burden to businesses whose past accounting practices were entirely honourable. Financial centres on the Continent, despite the claim that the creation of the euro would allow them to advance, remain far too inflexible. China and India will become major players in time but for the moment they are not huge international actors. London has, therefore, progressed on the basis of its own virtues and the weaknesses of others.

There is emerging evidence, nonetheless, that feast could be replaced by comparative famine. The decision by Merrill Lynch to relocate part of its operations to Dublin — largely for tax reasons — is more than symbolic. For while the numbers of people moving may be small, the proportion of transactions undertaken from its new site could prove far larger. If Merrill Lynch’s transition (which follows that of others such as Google) is perceived as a success, companies in similar fields will quickly emulate them.

London will continue to enjoy some advantages over its rivals. Yet many of these concern the pleasures of living in the capital itself which, while expensive, offers more than, for example, mundane Frankfurt can ever hope to do. But, ultimately, business locations are determined by what makes sense for profits and not the place that provides most pleasure to fund managers during the minority of their time not spent at their desks. It would be unwise to rely on Gordon Ramsay or Lord Lloyd-Webber to be the only reasons for London’s lead. London must be dominant if it is to create employment across the social spectrum.

The hard facts are that a tax burden which is rising by global standards, the increasing costs of compliance with regulation and frustration with an antiquated transport infrastructure are all sound reasons why companies may ask themselves whether more of their trading, if not all of their employees, should be placed elsewhere. The danger is that a London address could become a high-class nameplate while the real action drifts elsewhere.

Mr Brown’s response to this is to establish commissions of the good and the great, such as a High-Level Group on Financial Services, and to review the way in which Revenue & Customs interacts with large companies.

There are many in business who believe that the merger with Customs has brought a “cavity search” culture to the tax department. Companies and employees deserve to be given the benefit of the doubt, not probed by a man from the Revenue with rubber gloves. Corporation tax should be reviewed, so should the obsession with “perks” given to ordinary employees on basic salaries. Stamp duty should be cut or just abolished and the rubber gloves should be put back in the drawer.