London retains crown as top spot for attracting business and talent but Treasury warns of hit if Brexit transitional deal not secured soon

 
Jasper Jolly
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Sunrise Over Canary Wharf - The European Headquarters Of Numerous Major Banks
London has topped the decade-old ranking in every year since 2012 (Source: Getty)

London has retained its number one spot as the best major city in the world for attracting businesses and talent, according to an influential ranking published today.

The ranking, carried out by academics from top global universities for Japan’s Mori Memorial Foundation, shows the capital extending its lead, based on 70 factors ranging from the economic output per person to the ease of commuting.

London has topped the decade-old ranking in every year since 2012, benefiting from its cultural impact, in which it tops the chart, and powerful research capabilities, for which it is second after New York, the nearest overall challenger.

Tokyo came third in the ranking, followed by Paris, the highest-ranked “power city” in mainland Europe.

Read more: London holds on to global fintech lead (but other cities are chasing)

London’s dynamic economy was again a crucial factor in securing the top position, driven by the strength of the financial services industry. The capital topped the latest Global Financial Centres Index, published last month by the China Development Institute and think tank Z/Yen.

The city’s economy will continue to grow above the average for other European cities, according to separate forecasts by Oxford Economics.

The prominent economists predict London’s output will grow at a compound annual rate of 2.4 per cent per year until 2021, which would see it outstrip other major European cities, including Paris, Frankfurt and Berlin.

However, the forecast is highly dependent on a smooth exit from the EU for the UK, including a three-year transition arrangement followed by a free-trade agreement (FTA).

Read more: Colliers International names London top city of influence

The dominance of financial services in the London economy means it stands to suffer from a sudden collapse in market access between the City and the continent.

Chancellor Philip Hammond yesterday backed calls for a smooth transition, saying his priority was to address a “cloud of uncertainty over current negotiations” on Brexit.

The Treasury will not commit significant amounts of money towards planning for a “no deal” scenario in which the government fails to secure an FTA with the EU, Hammond told the Treasury Select Committee (TSC).

The Treasury’s top official in charge of financial services, Katharine Braddick, told the TSC that City firms will activate contingency plans if there is no transition agreed by the first quarter of next year.

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