The City of London is at risk of losing its status as a global financial powerhouse within five years, the Square Mile’s most influential lobbying body said today.
In a new report, TheCityUK worked with 60 financial services groups to set out international strategy proposals to return the UK’s financial capital to being the “world’s leading financial centre” within the next five years.
A vastly changing international economic landscape is chief amongst the reasons that the UK has seen a decline relative to its global competitors such as New York and Hong Kong over the past decade, according to TheCityUK.
Despite the UK’s growing size and volume of many market segments, it has paled in significance compared to the rapid growth of new financial centres in Asia and continued growth in the US.
Although it retains its crown as the leading European financial centre post-Brexit, the UK has lost global market share in areas such as cross-border bank lending, pension and hedge fund assets and insurance premium-writing, the lobby group warns.
“Europe is littered with cities that were once the leading international centre of their day,” Miles Celic, chief executive of TheCityUK, who called for the government to do more so that the London avoids the same fate.
“The last decade has been one of growth for our industry, yet global competitors have grown faster.”
The report focuses on boosting the competitiveness of financial services, the UK’s largest net exporting sector, by first strengthening its market share in areas where the UK already leads the way, such as fintech.
The lobbying body also calls for the UK to concentrate on four key strategic areas of future global growth where it holds a competitive advantage and can deliver world-leading services: global ESG markets; financial and professional services data and technology; international investment opportunities; and risk management.
Industry leaders, regulators and government must work together to create more high-skilled, high-value jobs in the UK and attract new foreign investment, the lobby group argues, through improving areas such as the country’s visa system and labour mobility.
It marks out the high costs of sponsoring visas for skilled workers as well as the long processing times as a key obstacle standing in the way of the UK’s ability to attract talent.
In order to stay ahead of the curve in sectors such as fintech, the lobby group recommends a regular review of the UK’s financial regulation so that it is proportionate and “technology-neutral” and is respected worldwide.
The group also calls for the government to amend the tax regime for the UK financial services sector, which it said was taxed “considerably more than rivals in competitor financial centres” in New York, Singapore, Hong Kong and Frankfurt.
The UK was overtaken by New York as the leading international financial centre in 2018, and received its lowest ever “score” as a a financial hub in March this year, according to the Global Financial Centres index that the lobby group used as a benchmark.
“With the right strategy in place and a clear focus on delivery, the UK can pull away once again from its competitors,” said Celic.
“It is an ambition that needs industry, government, and regulators to work together. It will take sustained focus, cooperation and determination.”