London wrests financial hub title from New York
London has reclaimed its crown as the financial hub of the world, less than one year before the culmination of Brexit negotiations. The UK’s capital city had been supplanted by New York five years previously, and according to the latest data available, the majority of senior professionals in financial institutions across the globe now consider it number one again, though the approach of Brexit could soon change that.
Professional services firm Duff & Phelps Corporation is a global valuation and corporate finance advisor, offering services in complex valuation, dispute and legal management consulting, mergers and acquisitions, restructuring, and compliance and regulatory consulting. According to the group’s annual global regulatory outlook, more than half of senior professionals in financial institutions across the world now see London as the preeminent global hub.
53% of those polled placed the UK capital ahead of New York, on 42%. This represents a sudden surge in support for the city, which only garnered support from 36% of participants last year. This reflects the views of many bankers who also maintained that London would retain its status as the EU’s financial centre, in spite of the UK’s protracted divorce with Brussels.
However, as the conclusion of Brexit negotiations rapidly approaches in 2019, leaders also noted concern of the regulatory impact that the UK’s exit from the Union may have. 64% of respondents stated that they believe Brexit will impact on their current compliance programmes, and a further 15% indicated that it has already affected their compliance function. A further 33% suggested that Brexit would have a delayed impact on them, hitting within the next 18 months. The Bank of England also recently anticipated that London could see an exodus of some 75,000 jobs in the financial sector, suggesting a rocky spell to come for London’s economy, which is heavily reliant on it global financial links, post-Brexit.
As a result, while London has only just recovered its reputation as the global financial hub, less than a third of people polled believe it can maintain that status. 29% were willing to predict that London will retain its top position in the next few years. New York looks set to be the chief beneficiary of this, with 52% expecting it regain its position by 2023 – although the Big Apple faces uncertainties of its own, with a continued threat of hefty import tariffs imposed by the Trump administration sending markets tumbling in June 2018, amid fears of a trade war with China and the EU.
Julian Korek, Global Head of Regulatory and Compliance Consulting at Duff & Phelps, said, “It’s refreshing to see that attitudes towards London’s global status have improved in the past 12 months. In previous years, London has lagged behind New York. For this to have been dramatically reversed with just a year to go until Brexit shows a growing confidence among financial services business leaders that London is still the number one place to do business.”
Korek added that many firms are using management companies and revising their operating models in anticipation of Brexit, in order to enable continued marketing in the EU, suggesting that there is likely to be a great deal of hard work ahead for the City, if it wants to retain the top position in a post-Brexit climate. Korek concluded, “When it comes to shaping London’s future outside of the EU, decisions taken now will be crucial in laying the groundwork for years to come.”
