THE heat of international business competition from Bermuda may be one of the factors that has persuaded the UK to consider lessening its demands on big corporations.

UK Chancellor of the Exchequer (Finance Minister) Gordon Brown this week told a meeting of City of London business leaders that he aimed to cut the burden of government regulation by 25 per cent.

And he made a particular promise to the insurance sector to look at creating "a lighter regime" of regulations.

Mr. Brown's comments came after two Lloyd's of London insurers, Hiscox and Omega, announced last month that they would both be relocating to Bermuda to take advantage of lighter regulations and lower taxes.

Finance Minister Paula Cox pointed out yesterday that UK companies were relocating to Ireland and other EU jurisdictions, so it was not just Bermuda that may have influenced Mr. Brown's thinking.

However, she added: "We come out ahead of other jurisdictions in most cases based on the aggregate of what Bermuda has to offer rather than on one component which can also be found in other jurisdictions. It is the Bermuda experience that makes the difference.

"Thanks to Bermuda's regulatory regime, sophisticated workforce, intellectual capital and physical infrastructure Bermuda is a well regarded full service international financial centre.

"Because of our first-class communications, ease of access, as well as our political and economic stability, uncomplicated legal and corporate framework, Bermuda continues to attract new international companies."

International interest in Bermuda as a jurisdiction had been boosted by a favourable assessment of the island's regulatory structure by the International Monetary Fund (IMF), Ms Cox added.

"Over the years all members of the Bermuda community have worked very hard including the supervisors of insurance and their team and the members of the insurance and reinsurance sectors and it goes without saying Bermuda got the right balance.

"This model is now being examined closely by others from all over the world because it is responsive to world demands and is based on sound regulatory practices.

"Interest in Bermuda in Asia rose after the Jardine Matheson Group relocated to Bermuda from Hong Kong many years ago.

"More recently HSBC Plc's move to establish a subsidiary in Bermuda through its purchase of the Bank of Bermuda has refocused the attention of European, Middle Eastern and Asian investors to the advantage of synergy offered by domiciling various forms of financial services entities in a sophisticated jurisdiction with a well established infrastructure of intellectual capital, particularly an unparalleled insurance infrastructure such as Bermuda has."

In a summit this week, the Chancellor met 35 business leaders, who are hopeful of a lowering of corporation tax rates, amid fears that the profit share claimed by the UK Treasury is driving businesses overseas.

Some commentators are also suggesting that the resurgent fortunes of the Opposition Conservative party has strengthened the hand of those pushing for lower taxation and less red tape.

Lord Levene, who is chairman of Lloyd's of London, has played down concerns of the loss of market share to Bermuda, but he is spearheading a three-year efficiency drive plan to keep Lloyd's competitive against overseas competition.

After speaking with Mr. Brown, Lord Levene said the discussions had been "full and frank" and that the Chancellor "took on board our concerns".

He added: "If there is any way in which the tax regime could be made more benevolent, we could attract more business."

The Confederation of British Industry (CBI) claims that business has paid out an additional $110 billion in taxes since the British Labour Party came to power in 1997. This has been largely down to buoyant profits and the closure of several tax loopholes.

Business leaders also told Mr. Brown that London's dilapidated infrastructure was making it difficult for City firms to recruit staff.