London loses sole spot as top financial centre as city ties with New York

A report by the City of London Corporation, Our Global Offer to Business: London and the UK’s Competitive Strengths in Support of Growth, has benchmarked the performance of the world’s leading financial centres across 95 metrics. 

This edition of the report found that London continued to perform strongly across all key dimensions, including innovation, reach of financial activity, resilience and business infrastructure, talent and skills and regulation. 

However, other financial centres are growing faster. London received an overall competitiveness score of 60, up from 59 in 2022, while New York’s score rose by 2 points to equal London with 60 points. Both centres were followed by Singapore, Frankfurt, Paris and Tokyo. 

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Chris Hayward, policy chair at the City of London Corporation, warned that the UK’s competitive advantage was at risk, despite being “one of the most open and global financial centres with better access to international markets than the US, France, or Japan”.

The City of London Corporation recently launched a joint initiative with support from Lloyd’s, Schroders, JP Morgan, EY, KPMG, Barclays, Glasswall and CIPL to ensure the UK’s international competitiveness of its financial and professional services sector over the next decade. 

The initiative, named Finance for Growth, will focus on tech and innovation, sustainable finance, competitive marketplace and international trade. The group will make recommendations for the competitiveness of UK financial services in Q3 2023. 

“A long-term plan to stimulate growth in the financial and professional services sector is needed,” said Hayward.  

“This is why we have launched, Finance For Growth, a new joint initiative with leading industry figures across the financial and professional services sector to put together a roadmap to reinforce and renew the UK’s role as a global financial centre.”

Areas for development

The report noted that despite changes to listing rules, the number of international companies listed in London is falling and fewer international companies are choosing to list in London, such as British chip-maker Arm, which opted for New York for its primary listing to the dismay of the UK government. 

The City of London Corporation has urged the government to look at how defined contribution funds can be better utilised to support high-growth industries to “start, stay and scale” in the UK.

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The report added that although the UK already boasts of one of the world’s most favourable regimes for financial services, ongoing improvements to the regulatory environment could make the country an even more attractive place for finance and investment. 

With over 40% of the City of London’s workforce coming from overseas, the governing body said the government should ensure the UK and London continue attracting the world’s top talent, while identifying and addressing skills gaps through organisations such as the Financial Services Skills Commission. 

Finally, the report argued that the UK should increase green bond issuance, as it still lags behind the US, France and Germany despite being the highest on record in 2021 with $35bn of new issuance.