BERMUDA is again the subject of scrutiny this week as the Mayor of London names the island as a "significant threat" to the UK economy, adding that we have cost the British capital $700 million and 700 jobs in the past eight years, writes Clare O'Connor.

In a rare official report, Boris Johnson (pictured) has singled out Bermuda as one of a handful of competitive jurisdictions "that have developed aggressive strategies to steal business away" from London.

The Mayor's report is the result of six months of research by a panel of top finance industry CEOs, including such heavy-hitters as the chairs of Merrill Lynch and KPMG.

"Amongst the backdrop of deterioration in some of London's historic strengths, the capital faces another significant threat: mounting competition from other financial centres," the report, released this month by the Greater London Authority, explains.

"Many of these centres benefit from tax rates significantly lower than the UK's, and some are targeting particular subsectors through grants and incentives."

The report goes on to list Bermuda's "competitive features", explaining its rise to dominance in the insurance industry – and the subsequent threat to London's economy.

"In insurance, Bermuda has been able to attract firms through a combination of a zero per cent headline rate of corporation tax, an attractive regulatory regime, efficient technology and proximity to the US market. Bermuda has cost London an estimated £450 million ($700 million) in taxes and 700 jobs since 2000."

Joining Bermuda on Mr. Johnson's list of rival financial centres are Luxembourg, Hong Kong, Singapore, Shanghai, Switzerland, Dublin, Paris and the Gulf region. The Cayman Islands, traditionally named in the same breath as Bermuda on such lists, has escaped the Mayor's scrutiny in this instance.

Mr. Johnson's report has attracted the attention of newspapers and magazines worldwide, landing on the pages of the Wall Street Journal, the Guardian and a host of other prestigious and well-read titles.

In Sunday's UK Observer newspaper, well-regarded columnist Nick Cohen blasted the island and its fellow "suspect jurisdictions" in an article entitled 'These vile tax havens have had their day', describing the island as a "modern version of pirate statelets of the Spanish Main".

It is just the latest in a string of attacks on Bermuda's finance sector, coming right on the heels of condemnations from US President-elect Barack Obama, UK Chancellor of the Exchequer Alistair Darling (pictured) and, most recently, Pope Benedict XVI, who last week alleged that jurisdictions like Bermuda are engaged in "illegal activities" including "tax evasion".

The Mayor's team of finance experts has recommended ways for London to fight back against the dominance of Bermuda and its competitors in some sectors. The report includes a proposal to review London's tax competitiveness relative to rival locations annually, and ensure the UK's corporation tax remains in the lowest 10 per cent of the leading EU financial centres.

In a statement accompanying the report, Mr. Johnson vowed to stop at nothing in order to protect London's finance sector from so-called "new kids on the block" like Bermuda.

"I will not stop until I lobby whoever it takes to remove the obstacles that are putting London's global reputation at risk from the new kids on the block chomping at our heels," the Mayor said.

In the days since the report's release, the UK media have been following Bermuda's plight with increasing interest. On Tuesday, the Financial Times, one of the world's foremost business publications, published an analysis of the current troubles plaguing Bermuda's (re)insurance sector under the stark headline 'Island under threat'.

"The north Atlantic island of Bermuda is best known for its pink coral beaches, turquoise seas and the eponymous knee-length shorts that its businessmen wear to the office," writes Andrea Felstead.

"The island also has a favourable tax regime that has proved attractive to companies and especially insurance and resinsurance groups. But Bermuda's status has the industry's favourite tax haven could be under threat."

Ms Felstead's article includes interviews with senior partners at well-known companies Deloitte and PwC, who express concern about the island's future with both the US and the UK targeting Bermuda's so-called tax loophole.

The author also notes that "tax is not the only challenge for the island".

"Bermuda is becoming increasingly crowded, and some observers question whether its infrastructure would be able to withstand another onslaught of new entrants to the reinsurance market," she says.