London Calling: London holds on to number two slot in financial centres ranking
London has clung on to second place in a respected ranking of the world’s top financial centres but its position in the top tier is under threat amid Brexit chaos and other global geopolitical shifts.
According to the latest financial index published by researchers at consultancy Z/Yen, London has retained its number two spot behind New York following a year dominated by geopolitical uncertainty and a US-China trade war.
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However, the capital shed 14 points in the score ratings as Brexit uncertainty took its toll on the business environment, while Paris surged up the table with a 29 point gain, the largest rise within the top 20 countries. The French capital climbed 10 places, from 27th to 17th.
The report, seen exclusively by City PM, suggests that London would be reduced to just a two point lead over Paris if both cities record similar falls and rises in next year’s rankings, posing a challenge for policy-makers and City leaders looking to preserve London’s global status.
“London remains second, but the signs for the future are worrying with Asian and other European centres showing strongly,” warned Z/Yen’s executive chairman Michael Mainelli, who told City PM that the UK must “re-establish its reputation for predictability and pragmatism”.
All five top financial centres suffered a drop in their ratings, as a tit-for-tat tariff war and rising global tensions rocked markets across both the east and the west.
Reacting to today’s report, Canada corporation’s policy chair Catherine McGuinness said: “In what is undoubtedly a challenging time, London maintaining its position as the world’s second-ranked top financial centre is an affirmation of its fundamental strengths.
“But we cannot afford to be complacent, particularly at this time. Sustained Brexit uncertainty is leaving business with its hands tied, reluctant to make everyday decisions on recruitment, expansion, and investment. Day by day, as uncertainty persists, so does the threat of more businesses moving jobs and operations away from the UK.”
Questions over the future of British and EU financial centres have mounted amid ongoing Brexit negotiations between the two sides, with a recent report from City think-tank New Financial forecasting that capital markets in the trading bloc will look “smaller, less developed and more French” after Brexit.
The think tank has said that EU capital markets post-Brexit will be nearly a third smaller than they are today, as the body looks poised to split from Britain, “its largest and deepest pool of capital”.
Z/Yen’s Global Financial Centres Index (GFCI) also found that New York bolstered its lead as the top financial centre of the world, while Shenzhen, Dubai, and Sydney all made their way into the top 10 and eased out Toronto, Zurich, and Frankfurt.
Mumbai also shot up 20 places in the ranking, while both Madrid and Munich fell down several spots.
The new FinTech index, published alongside today’s GFCI, showed China dominating the financial technology sector, with Beijing and Shanghai topping the list.
New York, London, Singapore, San Francisco, and Chicago also featured in the top 10 for FinTech.
“This [report] sends a strong positive message about London and the UK’s competitive advantage as a hub for financial and related professional services. It underlines our industries position as a world-class British success story,” according to Miles Celic, chief executive of TheCityUK.
But he added that the index “also sends a striking warning signal to Europe about the growing global dominance of Asian and North American financial centres…Europe boasts only three centres in the top 15, and of these, just one will be within the EU post-Brexit.”
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Jasmine Whitbread, boss of London First, said: “London is one of the best cities in the world to do business – it remains a top destination for multinational HQs and inward investment, and also has world-class theatre, art, museums, and football teams.
“But the competition remains fierce and if London is to maintain its position in the top tier, we must look to invest more in our infrastructure, and the government should create a flexible and open migration system that keeps the capital at full strength.”
Main image credit: Getty