Financial services in the City of London will remain under increasing pressure over the coming years. As the UK economy recovers and global expansion begins to gather pace again, output in the financial sector will eventually regain its pre-financial crisis peak. However, growth in the City is unlikely to ever reach the speeds seen in the 2000s. As an attractive and desirable financial centre, London is under increasing competition from cities in the Far East, like Shanghai, Hong Kong and Singapore. The more favourable regulatory and tax regimes in those jurisdictions, coupled with their geographical proximity to faster growth areas in China and other emerging economies, will act as a powerful pull factor for financial institutions deciding where to invest and to locate.
Rob Habron is an economist at the Centre of Economic and Business Research.
London has courted some terrible publicity over the last few years. But once these transgressions are resolved, London will still be the best place to do business in the world. We are in the central timezone, English is the international language of the world, and the City continues to attract the very best business talent. Other financial centres – including New York, which is quite insular – are not as adaptable as the City. But for this to continue, London needs to ensure that it maintains a decent relationship with the EU (which we do a significant amount of our business with) without getting tangled up in its spiders’ web of bureaucracy. And we should also be sure to continue our already excellent connections with emerging markets – China, India, Indonesia, Africa and South America. It may be a decade before the recovery can begin.
David Buik is spokesperson at Cantor.