HSBC Holdings, Europe's biggest bank, will review whether to move its headquarters out of Britain, potentially dealing a blow to a country trying to balance tighter regulation with the importance of the financial industry to its economy.

The announcement comes less than two weeks before UK elections on 7 May and poses challenges for both the Conservatives seeking to return to government and their main rival, the Labour party.

Responding to the news British Prime Minister David Cameron said his ruling Conservative party had taken steps to re-inforce London's position as the "world's leading financial centre".

"We've improved London as a financial centre not least by changing the way we regulate banks so that we wouldn't have to bail them out with tax payers money in future as the last Labour government had to do," Cameron said.

"But it is an important reminder of how vital it is that we keep a pro-enterprise, pro-business, pro-employment policy in our country of keeping taxes low, making us an attractive place to invest and all the time I've been prime minister that is what we've been doing which is why we see record levels of inward investment coming here to Britain and we must keep on with that approach and not put it at risk," he added.

The opposition Labour party said that Cameron's timescale for a referendum on Britain's EU membership had sent a wave of uncertainty across boardrooms.

During a foreign policy speech at London Chatham House the party's leader, Ed Miliband, said: "I think the intervention from HSBC is very significant today. They say it was the number one uncertainty that our country faces, withdrawal from the European Union. And this does go to a question of priorities and what is in the interests of our country, I think the last thing our country needs is two years of an internal of an internal debate about whether we should leave the European Union or not when that isn't what I want to happen."

HSBC last reviewed its domicile in 2010, and had previously said it would re-assess its position in 2015.

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HSBC David Cameron Ed Miliband