London and New York need each other
Much fuss is made about the “lead” or “lag” that London shows vis-ą-vis New York in the financial and business sector.
Whenever studies such as the Global Financial Centres Index report is published, many commentators pore over the tables to see by what degree London or New York is ahead.
This misses the point: more than any two world centres, London and New York are interdependent. Every time I walk into the City’s Guildhall on its 2,000-year-old site in Gresham Street, I pass the neighbouring J P Morgan office building and am tangibly reminded that much of London’s international strength comes from the global businesses that originated in the US, as well as from elsewhere.
Of course to get to Guildhall, I also pass banks from India and China. The great move east of capital resources will inevitably lead to strong growth in financial centres there, each of which will want its share of London’s international financial business.
Competition is good
In itself this is good thing: London believes in open competition and we have nothing to fear from the future, as long as we continue to hone our skills and offer the best environment for global business.
But US financial services stretch much further than the length of Wall Street: over the next two weeks I am leading Canada delegations in Chicago, Boston, Charlotte and Atlanta, as well as visiting New York.
Chicago, for example is not only a world leader in the trading of commodities, options and futures but a major economy in its right. As a country, Chicago Metropolis would rank No 16 in the world and have a larger GDP than Indonesia or Switzerland, while Boston is the home to the management of about a quarter of the world’s mutual funds.
Massachusetts is home to vast swathes of asset managers, investment advisers and those in asset servicing – and is a key global centre in research and portfolio management, with many firms long-since globalised and therefore present in the UK for three decades.
Many of the products and ideas which London is able to take global come out of the US and Massachusetts is a key innovation centre.
Of course what is happening to the US finance, banking and mortgage sector, regulatory environment and general economy are of huge interest to London-based players and our interlocutors will be sharing with us a great deal of information and insight.
What you can see on a screen, or read in a brief while in London is useful but nothing beats direct contact with practitioners on their home turf.
London’s future and the future of the America’s financial services centres are intertwined closely: working together is the best way forward.