19 September 2019

Financial Times: London slips further behind New York in financial centre rankings

London has slipped further behind New York in a ranking of the world’s financial centres, as extended uncertainty over Brexit and the City of London’s relationship with the EU has damaged the attractiveness of the UK capital.

New York seized the top spot from London last year, ending the city’s five-year stint as the world’s premier financial capital, according to the twice-yearly global financial centres index compiled by consultancy Z/Yen.

Although there has not been the exodus of workers from the financial sector predicted in the months after the Brexit vote, banks and other financial services companies have been reluctant to invest while they lack clarity on how they will be able to conduct their business.

That has been a boon to other European cities, including Dublin, Frankfurt, Amsterdam and Paris, which have attracted groups that need to set up EU headquarters in anticipation of the loss of passporting — the ability to offer services across the EU from a London base — after Brexit.

On current trends, Paris and China’s financial centres are on track to overtake London within the next two years. Paris jumped more than 10 places in the latest index, making it the fourth highest ranked European city after London, Zurich and Frankfurt.

“London remains second, but the signs for the future are worrying with Asian and other European centres showing strongly,” said Michael Mainelli, executive chairman of Z/Yen. “Policy uncertainty, Brexit, trade wars and geopolitical unrest are causing more volatility in financial centre performance.”

The French capital’s efforts to woo banks and other financial institutions have been helped by the relocation of the European Banking Authority to the city from London, which completed in June. [...]

“Sustained Brexit uncertainty is leaving business with its hands tied, reluctant to make everyday decisions on recruitment, expansion and investment,” said Catherine McGuinness, policy chair at the City of London Corporation.

“Day by day, as uncertainty persists, so does the threat of more businesses moving jobs and operations away from the UK.” [...]

“Today’s index . . . sends a striking warning signal to Europe about the growing global dominance of Asian and North American financial centres,” he said.

“Europe boasts only three centres in the top 15, and of these, just one will be within the EU post-Brexit. With European economies facing significant economic headwinds, it is vital that policymakers keep a sharp weather eye on wider European competitiveness.”[...]

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