London remains Europe’s major global finance centre despite Brexit hit
London has held on to the second spot in a respected international study of financial centres, despite the double whammy of Brexit and the Covid-19 pandemic.
London sits behind only New York and remains Europe’s only major global financial centre, remaining a number of spots ahead of Frankfurt and Zurich.
But Asian competitors Shanghai, Hong Kong and Singapore are closing on the capital.
“Our financial services sector has demonstrated resilience over the past year, providing stability amid considerable economic uncertainty. We remain confident in the City’s future and our long-term fundamentals,” Catherine McGuinness, policy chair at the City of London Corporation said.
“But we cannot afford to rest on our laurels. It is vital that policymakers focus on the UK’s competitiveness, by investing in infrastructure and skills across the country.”
There have been concerns that the lack of an equivalence deal for financial services in the UK’s Brexit deal has meant the City has lost out on business.
The government is currently holding talks with the EU over future regulatory cooperation on financial services. The only way the City can regain its pre-Brexit access is if Brussels grants regulatory equivalence in about 40 different areas.
Amsterdam surpassed London as Europe’s largest share trading centre last month in January, trading an average €9.2bn shares a day.
While much was made of London losing its crown, Amsterdam is still a relative minnow placing 28th in Z/Yen’s Global Financial Centres Index.
London secured the top spot for financial sector development while being recognised for human capital and infrastructure, which includes regulation.
It supports a recent survey of global chief executives which found the UK is a more attractive investment proposition than it was before Brexit.
PwC’s annual survey of global chief executives revealed the UK has overtaken India as the fourth most attractive growth target to bosses, behind the US, China and Germany.
London’s fintech offering has also been recognised coming in fifth place behind New York, Shanghai, Beijing, and Shenzhen. It has become an important part of the UK economy with London attracting more private funding than all other European cities combined.
It has been helped primarily by a friendly regulatory environment, like the Financial Conduct Authority’s sandbox scheme, and the government is hoping to implement fresh measures to support the sector.
“The UK needs to ensure our regulatory framework keeps pace with technological change and innovation. That is why we urge the Government to implement recommendations from the Kalifa and Hill reviews,” McGuinness added.