London hot on New York’s heels as financial centre race ramps up
London is now within a whisker of ousting New York as the world’s leading financial hub, fresh rankings reveal, but risks remain over the capital’s fintech prospects.
The City was chomping at the heels of the Big Apple with just a singular rating point between the two.
New York once more topped the rankings in Z/Yen’s 38th Global Financial Centre’s Index (GFCI 38) but lost three points whilst London gained three.
Whilst none of the top ten changed their rank, there was just a singular point separating each member of the top four.
The GFCI ranking also showed London held onto its European crown towering above Frankfurt and Geneva – which took second and third place – by nearly 20 points.
But elsewhere, London took a tumble in the fintech rankings – an area where it previously looked like it could seize New York’s crown.
When it comes to fintech, Hong Kong and Shenzhen have now claimed the top spots with London’s rating dropping by five points sending the capital to fifth place.
Janine Hirt, the chief executive of fintech’s industry body Innovate Finance, told Morning Wire: “The risks posed by international competitors are very real.
“Countries around the world are increasingly vying to be the destination of choice for innovators, and as our recent half-year investment report found, the UK has for the first time in nearly a decade slipped from second to third place in terms of securing global Fintech investment.”
London has battled a series of dreary news in the fintech sector – despite attempts from Rachel Reeves to bolster the sector – with money transfer firm Wise ditching its listing and Klarna snubbing the City for Wall Street.
Whilst the industry remains a European leader, its global status has faced renewed threat.
A spokesperson for the Financial Conduct Authority said: “Supporting growth and competitiveness is a cornerstone of our strategy to help maintain London and the UK’s position at the forefront of global finance across sectors such as fintech, banking and investment management.
“This year alone we are working at pace to deliver over 50 initiatives to support economic growth. This includes rebalancing our approach to risk to unlock innovation, attracting more inward investment, encouraging the export of UK financial services, and making it easier for firms to establish here and create jobs, while maintaining standards that underpin our global reputation.”
Reeves and Bailey feud could hold London back
Michael Mainelli, chairman of the Z/Yen and former Lord Mayor of London, said: “The extremely close ratings of centres in the index shows the intensity of competition among leading financial centres from the highest rated to the lowest.”
Mainelli said: “The common core competitive component is regulation.
“Predictability and flexibility of regulation provide a secure platform for financial markets to grow, far ahead of cost as a basis for competition.”
Rachel Reeves unveiled a deregulation push that she said would “rewire” the financial services system earlier this year.
In a package dubbed the Leeds Reforms, the Chancellor announced a crackdown on the Financial Ombudsman Service (FOS), changes to the bank’s MREL threshold (the minimum amount of money and certain types of debt a bank must have), and consultation on the controversial ring-fencing regime.
Just this week, the banking watchdog pledged to rip up 37 “individual reporting templates” in a bid to streamline financial reporting for firms.
But the Treasury has faced a major block in the Bank of England with governor Andrew Bailey warning policymakers should “not forget the lasting damage” caused by the financial crisis.
Reeves, however, has argued post-crisis regulation has gone “too far”.
The country’s leading financial titans were said to have clashed over a meeting regarding fintech juggernaut Revolut as the firm pursued its banking licence.
Bailey was also reported to be “really pissed off” by the Chancellor’s comments that regulation is a “boot on the neck of businesses” at Mansion House earlier this year, according to the Financial Times.