The report is a wake-up call to policy makers that London’s standing as a world-leading global financial centre should not be taken for granted. In the face of growing competition across the world, most notably Asia, London cannot afford to be complacent.
This research based on an independent survey of financial services professionals between July and December 2009, tracks changing perceptions of competitiveness of the leading financial centres globally, in combination with data from a set of external indices. This report adopts a new approach to profiling different types of centres along new dimensions of competitiveness that reflect how well-connected they are in the global financial architecture, and how diversified their financial services are.
During a period of considerable volatility as the global economic recovery got underway, it is not surprising to see the improvement in respondents’ optimism compared with the views of respondents six months and particularly one year before. However, their optimism is still muted by the prospect of the challenges to be faced over the next few years in reaction to the financial crisis; and any reading of relative rankings needs to take account of a very large uncertainty factor.
For the first time, London and New York are now level in the ratings in first place with Hong Kong and Singapore still leading in Asia in third and fourth places respectively and Tokyo in fifth place. Of the 75 centres rated, 71 centres have received higher ratings and only four have seen decreases in their rating. The report indicates that the gap between the top two centres and Hong Kong in third has narrowed. It now stands at 36 points, down from 45 in GFCI 6 and 81 in GFCI 5. Asian centres continue to make gains, with Hong Kong, Singapore, Tokyo, Shanghai and Beijing, in particular, all recording strong performances.
What exactly affects the success of established and rapidly emerging major financial centres is a key question for London and the wider UK-based financial services industry going forward. Whilst this will be the last GFC report that the Centre publishes, it will shortly be announcing a new research programme that takes the issues forward by examining them in greater depth.
In short, this research is a wake-up call to policy makers that London’s standing as a world-leading global financial centre should not be taken for granted. We cannot afford to be complacent in the face of growing competition across the world, most notably Asia. There is a danger that new regulation could accelerate this shift in the financial centre of gravity towards fast-developing markets by undermining the UK’s competitiveness. Industry and government must work together to ensure that this does not happen.
© City of London
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