The capital is key to rebuilding the economy
Nothing since the three-day week has so disrupted British daily life as the Covid-19 pandemic, and it is hard, sometimes, to imagine a world after it. Even the optimistic projections have us stuck at home — or worse, in hospital — for weeks if not months on end.
But right on cue the Global Financial Centres Index has arrived to remind us that when this scourge finally leaves our streets and lives can return to something like normal, the world is changing apace in myriad other ways. London has retained its second slot, slipping a little in its pursuit of New York.
But more interesting is the continued rise of alternative centres, largely centred around the pacific. It’s not just Chinese megacities, packed full of state-enterprise cash; Tokyo has regained third place, and Los Angeles — not all that long ago a financial afterthought — has jumped into the top 10.
Only two western European cities make the top 10; London and, for other reasons, Geneva. But to paraphrase Mark Twain, reports of western Europe’s demise may be exaggerated. Edinburgh has shot up the table to 19th; London’s position as a fintech hotspot is assured. The question now is how the government responds to those threats in the pacific rim to ensure that London stays in the top tier.
The first, as ever, is access to skilled people. At some point in the not too distant future, thoughts will return to the UK’s departure from the EU, albeit a departure now almost inevitably delayed. Ensuring the immigration system is City-friendly should be a priority.
The second is a regulatory environment that allows for innovation. UK regulators have stolen a march in recent years and they must not relent in their pursuit of a future-proofed regulatory regime. It is vital that a post-EU trade deal gives British watchdogs the freedom to give potentially revolutionary fintech outfits enough slack on the leash to explore new avenues.
And third, the impressive Rishi Sunak might resist the urge to fill the hole in the post-Covid Treasury coffers with popular but damaging and self-harming taxes on financial services.
Getting Britain’s deficit back under control after this sudden increase in the size of the state will be a gradual job, the most important facet of which is allowing the economy to grow — quickly. Having not one but two financial hubs on this rainy North Atlantic island will be crucial.
Main image: Getty