Britain's business leaders are deeply gloomy about the ability of London to remain competitive, with the pessimists among them doubling in the course of a year.
A poll carried out by the Confederation of British Industry and consultancy KPMG found that six out of ten business leaders in London feared the city's competitiveness was under threat, double the number of a year ago.
The poll of senior executives showed that just one in 12 believed the capital's competitiveness is improving, down from almost one in three a year ago.
Poorly-handled reforms, such as the government plan to tax wealthy non-domiciles, had damaged the UK's image as an attractive business location, it added.
The credit crunch was also afflicting companies in the capital, with four out of ten business leaders polled saying it had become harder to raise money. Worse, many also expected it would get more difficult.
Almost a third of executives feared they would have trouble raising finance over the next six months, up from nine per cent a year ago.
And while the volume and value of business activity was still growing, it was doing so significantly more slowly than in the past.
As a result, the proportion of businessmen and women who were pessimistic about their firm's prospects over the next six months had jumped from five per cent reported in March 2007 to more than a quarter – 28 per cent – now.
It was not all doom and gloom, however. Nine out of 10 still thought of London as a favourable place to do business, though only 37 per cent described it as "very good", compared with 46 per cent a year ago.
Away from tax and finance, the capital's creaking road and underground rail network was the biggest cause of concern, shadowed by worries over skills levels and red tape.
A year ago just under six out of 10 had described the transport system as "good" or "good in places".
This had fallen to 38 per cent now, with another 37 per cent saying it was "poor" or "getting worse". Two-thirds said London's roads were also getting more congested.
On skills, nearly three quarters of executives complained they were currently unable to fill some skilled job vacancies.
Although the number of employers expecting skill shortages to cause them problems before the end of the year was lower than a year ago, more than six out of 10 still feared it would happen.
CBI director-general Richard Lambert, said: "The message is clear – business is getting more difficult in London, partly because of the global economic slowdown but also the more particular problems of transport and skills.
"London must be able to compete for business alongside old rivals like New York and new ones like Shanghai and New Delhi.
"This means protecting its reputation as a welcoming and predictable place for business, having a pool of highly skilled employees, and always working on its weaknesses," he added.
Among other findings, seven out of 10 expected to come under pressure to raise wages over the next six months, while three quarters said their employee costs had increased since last year.
More than nine out of 10 said London was now more expensive than other major international cities such as New York, Tokyo or Paris.
Nearly four out of 10 had moved some activities offshore, an increase from the third reported a year ago, with four-fifths saying the move had benefited their firm.
And, while nearly two thirds believed having the 2012 Olympic Games in London would help the UK capital, only 44 per cent expected to see a direct benefit for their business, down from the 58 per cent recorded last December.