London has lost its sole lead as the world’s top global financial centre, according to research by the City of London that will add to concerns over the competitiveness of the Square Mile.
London and New York have tied for the top spot, according to benchmarking data by the City’s governing body. This marks the first year that the UK capital has not been the clear leader as other financial centres have grown faster.
Financial services executives have warned that the UK is at risk of losing its place as a top financial centre after Brexit, which forced some companies to move operations to the EU.
There are also concerns that the US is a more attractive place to list and grow businesses, given the prospect of higher valuations and a less restrictive business culture.
Companies such as Cambridge-based Arm and CRH, the world’s largest building materials group, have said in recent months that they would seek listings in New York.
In response, British ministers have outlined a range of potential services reforms including to the UK listings market, as well as attempts to deregulate key sectors such as banking and insurance to drive new business.
Chris Hayward, policy chair at the City of London Corporation, said London’s “competitive advantage is at risk”, adding: “A long-term plan to stimulate growth in the financial and professional services sector is needed.”
The City of London Corporation has begun working on its own proposals to ensure the UK financial and professional services sector remains internationally competitive over the next decade.
An initiative backed by Lloyd’s, Schroders, JPMorgan, EY and Barclays is drawing up recommendations to be published in the autumn.
The City of London Corporation – which governs the area around London’s financial district – has been publishing an assessment of the competitiveness of major financial centres for three years.
The City on Thursday said London received an overall competitiveness score of 60, up from 59 last year, but New York increased its score by two points to equal London. Singapore placed in third, scoring 51, while Frankfurt scored 46, Paris 43 and Tokyo 35.
The survey found that London continued to perform well across factors such as innovation, reach of financial activity, resilience and business infrastructure, talent and skills, as well as regulation.
But New York’s score increased through high growth in tech investment, deal making and increased levels of sustainable finance issuance.
The report found that the UK’s financial and professional services sector generated £64bn in trade surplus in 2022 – the largest of any country. But it also said fewer international companies were choosing to list in London, despite changes to listing rules.
The City wants ministers to encourage defined contribution funds to invest in high-growth industries, which would then lead them to stay and scale in the UK, as well as increase focus on areas such as green bond issuance that still lags the US, France and Germany. – Copyright The Financial Times Limited 2023
