London top global financial centre as new regulations send positive signals to businesses, research finds
The City of London Corporation has announced that London continues to lead as the premier international financial hub, surpassing New York City, which now ranks second, according to their latest publication. The document titled “Our Global Offer to Business: London and the UK’s competitive strengths supporting economic growth,” evaluates the world’s top financial centers using 101 different measures, including a novel one that assesses the resilience of business infrastructure.
Despite a downturn in its capital markets operations and the size of assets managed, London excelled in areas of sustainable finance and in having a skilled workforce. While New York outperformed in technology and broader financial sectors, its ratings dropped this year due to the end of the pandemic-era bull market, exacerbated by high inflation and significant increases in interest rates.
London’s top placement, with a slightly reduced competitiveness score of 59 from last year’s 60, is attributed to its high standards in regulation and a welcoming attitude towards businesses, enhanced by recent implementations like the Financial Services and Markets Act and the Edinburgh Reforms. Meanwhile, New York’s score fell to 57, a three-point drop. Singapore remains in third, losing three points to 48, followed by Frankfurt and Paris with scores of 44 and 40, respectively.
The Mansion House Compact, introduced last year, highlights ongoing initiatives to encourage UK investments into high-tech, life sciences, and biotech, with significant engagement from leading DC pension firms.
London top global financial hub
The City of London Corporation’s “Vision for Economic Growth” aims to foster prosperity within the UK’s financial and professional sectors over the coming decade. This initiative, which included input from over 300 industry stakeholders, offers a strategic blueprint for innovation and addressing the decline in capital markets activities. A central recommendation is the establishment of a council to guide financial and professional services, inspired by successful models in Singapore and Ireland.
Chris Hayward, Policy Chairman of the City of London Corporation, expressed satisfaction with London’s sustained leadership but emphasized the need for further reforms to maintain this competitive advantage. He highlighted the significance of the report’s findings in demonstrating the positive impact of recent regulatory modifications on business optimism and the simplification of international talent recruitment and business operations.
Professor Michael Mainelli, the Lord Mayor of the City of London, pointed out that despite various macroeconomic and geopolitical challenges, the UK’s financial services play a crucial role in stimulating growth and showcasing the City of London’s specialized expertise. He underscored the importance of the UK asserting its position as a technological powerhouse, particularly in AI innovation and digital transformation, given London’s significant concentration of tech unicorns.
The report also notes London’s achievements in regulation, talent acquisition, and sustainable finance, including a 68% increase in foreign direct investment, leading to significant job creation. London’s position as a sustainable finance leader and its competitive office market were also highlighted. Despite these strengths, the report identifies challenges for future growth, including potential impacts of higher interest rates on capital market activities and the decline in fund assets management and capital markets activity. Additionally, it points to concerns such as the decreasing number of foreign companies listing in the UK and the comparatively high tax rate for banks in London.