THE CITY OF LONDON CORPORATION’s annual report into global financial centres has for the first time put New York joint-top alongside the capital – with a warning that the Square Mile’s competitive advantage is “at risk.”
According to the updating ranking compiled by the body which governs the City, London – which had come top outright in the previous three years of the report – will have to do more over the next few years to reassert its position.
While London did not perform worse in any of the categories, the capital’s score remained stagnant as global rivals caught up. New York’s score increased through high growth in tech investment, more deal making and increased levels of sustainable finance issuance.
Singapore meanwhile came third with its access to talent and its low-tax system giving it an advantage over other rivals.
“The UK remains one of the most open and global financial centres …But our competitive advantage is at risk,” Chris Hayward, policy chair at the City of London Corporation, said.
“A long-term plan to stimulate growth in the financial and professional services sector is needed,” Hayward continued.
The UK maintained its traditional strengths in foreign exchange trading and commercial insurance, helping the UK’s professional services sector to generate a £64bn trade surplus – the largest of any country globally.
The Corporation suggested “ongoing improvements to the regulatory environment” will make the UK a more attractive place to invest, referring to the Edinburgh reforms.
Hayward said “the Edinburgh Reforms are a great symbolism for what post Brexit UK can be. The City sees it, and the Solvency II reforms, as a good starting point, but we need a long-term strategy.”
The report highlighted a series of changes to help London secure its position as a major financial hub as part of its new Finance for Growth framework.
Finance for Growth will be a report led by industry experts which maps out a long term plan for what regulation and legislation needs to be put in place to allow the City “to once again lead”.
A particular focus is changing rules on listing to attract international companies to London. This has been a particularly prominent issue following ARM’s decision to list in New York.
Another challenge is to direct domestic investment into UK start-ups, such as by using defined contribution funds to support high-growth industries.
“Whilst the UK is home to a thriving tech and start-up scene many firms lack the funding needed to grow. This leads to firms looking for capital abroad particularly in the US,” Hayward said.
“Plugging the funding gap and looking at ways we can get firms to list in London must be a priority.”
Although London scored relatively well on the environmental factors, including the number of ESG funds and how widespread science based targets were, the report recommended increasing the UK’s green bond issuance. The US, France and Germany all outperformed the UK in green bond issuance.