Innovation is why London is ahead of New York, Hong Kong and Frankfurt as world’s financial capital
It would be easy to be downbeat about London’s future as we face the twin challenges of starting a new trading chapter and tackling a damaging pandemic.
Some cynics have even gone so far as to suggest that the capital’s days as a world leading business hub are numbered.
It is welcome, therefore, that a new report shows London continues to lead the world when it comes to financial and professional services.
The research by the City of London Corporation shows how London and the UK compare with other financial centres taking a total of 91 different metrics into account.
With a competitiveness rating of 62, London was well clear of New York (54) and Singapore (53), trailed by Frankfurt (41), Hong Kong (40) and Tokyo.
One of the principal reasons for this success is London’s ability to innovate. With a globally connected market, skilled talent, and regulatory and government support, the UK is the only global financial centre that offers a ‘full-package’ innovative ecosystem.
London is also at the forefront when it comes to business infrastructure and operational resilience. Unrivalled global connections and the UK’s strong cybersecurity framework and digital security measures means businesses can operate with confidence.
Additionally, our globally renowned universities and MBA programmes produce a world-leading pool of entry-level talent and this is supported by labour laws that are flexible and allow firms to be reactive.
It is little surprise then, that London remains Europe’s destination for investment in financial services. In 2019, the UK’s net financial services exports were higher than the value of Singapore, Hong Kong, and Germany’s combined.
However, whilst these findings demonstrate that the UK continues to lead the world when it comes to financial and professional services, it is important not to be complacent. To remain competitive, the UK must address several key challenges. Some of these are posed by COVID-19, and some are more fundamental.
Firstly, we need to invest in infrastructure and skills across the country and ensure our regulatory framework continues to stay abreast of technological change and innovation.
The UK needs to close skill gaps in London and across the country, provide skilled international talent with a pathway into UK-based firms, and re-build London’s attractiveness as a metropolis post-COVID, competing with New York and the US and avoid a talent drain to centres such as Singapore.
Singapore also leads for the most enabling regulatory and legal environment. With global challenges at the horizon, the UK’s government must regain its perception of being predictable, stable, and strategic.
This will reinforce businesses’ confidence that the UK is a market worth investing in.
As we take over the G7 presidency and prepare for the COP26 climate conference in Glasgow, the UK will have a major opportunity to show global leadership.
I will have the chance to address why our financial services sector has such a vital role to play in tackling climate change and driving the post COVID-19 recovery, at the Gresham Lecture on February 1st, which has ‘Building Back Better’ as its central theme.
The financial and professional sector will be the lynchpin for all other sectors – indeed, the whole world – to turn green. Ensuring London remains one of the best places in the world to do business is paramount to securing a bright future for the UK, as we enter a new era.