London and Tokyo have a tight bond centred around financial services. The UK and Japan are close allies, and can only become closer if we invest in this financial partnership, writes Nicholas Lyons
There are some cold winds of economic challenges facing the world, but the UK can look towards one of many bright, sunny spots: our trading relationship with Asia.
Last year, combined trade with Asian markets amounted to £281bn, and with negotiations ongoing with India and the UK’s membership into a power-house Pacific-trading bloc worth £9tn, these figures are expected to climb even further.
This is what I’ll be discussing with the Governor of Tokyo, Yuriko Koike, at Mansion House this week at the launch of the London-Tokyo finance seminar.
Our financial services links are a crucial part of our trading relationship with Japan. In the middle of last year, these were the top exports from the UK to Japan, accounting for thirty-five percent of service exports, with insurance and pensions making up another seven per cent. These are huge trading export figures, accounting for £2.5bn – which works out to about £19 per person in Japan.
This relationship is also helped by the long-standing friendship between the United Kingdom and Japan; at the end of last year, we agreed a new digital partnership to aid collaboration on infrastructure and technologies. Indeed, just this month the UK Prime Minister chose the Tower of London to be the site of a historic defence agreement, co-signed by the Japanese Prime Minister Fumio Kishida, allowing UK forces to be deployed to Japan.
If the UK and Japan’s relationship is close, then the relationship between the City of London and Tokyo Metropolitan Government is closer still.
The Japanese Prime Minister spoke at the City’s Guildhall to announce his new economic plan and the City of London signed an agreement with Tokyo’s Metropolitan Government to ensure that we can support each other’s development. Indeed, our two cities share significant similarities: sites of worship that have stood for hundreds of years, world-renowned cultural institutions and a financial services sector dedicated to innovation.
On this last point, Tokyo has been outspoken about its aspirations: to create a Fintech city and turn Tokyo into a stronger and more international financial centre. There are many other opportunities for our two cities – indeed, our two countries – to collaborate on this goal.
Take asset management for example, a specialism where there is great collaboration between our two countries. We know that many large Japanese investors – like Sumitomo and Nomura – invest in UK asset managers, mainly through private investments. They are right to do so, as the UK is a world leader here, accounting for fifteen per cent of global assets under management – managing eleven-trillion pounds of assets.
A crucial part of the seminar will be discussing barriers and opportunities to greater collaboration with Tokyo. Hiroshi Nakaso, the chairman of the project, known as FinCity Tokyo, has highlighted many priorities we need to address, including greater coordination between services and ensuring they can act as a gateway to global markets. The City of London has worked hard to connect its financial centres across the country and ensure regulators and innovators are equally welcomed into the market. We have much to offer and much more to learn.
The sun continues to shine on the blossoming financial and professional services partnership between Tokyo and London. I know that both the UK and Japan are working hard to ensure the rising sun of that relationship never sets.