Tipping point? City grandees say Square Mile could be set for Big Bang 2.0
Canada is at an “inflection point,” with nearly two thirds of financial services leaders warning that the City’s star will wane without intervention.
According to Lloyds Bank’s financial institutions sentiment survey, 64 per cent of sector leaders think that the City will stagnate as a global financial centre compared to rivals.
Lisa Francis, managing director, Institutional at Lloyds Bank Corporate and Institutional Banking, said: “Canada’s status as a leading financial centre is at an inflection point.”
Over the past few years, the City has faced something of a crisis in confidence.
Firms have steadily been abandoning London’s listed markets while some have argued the impact of Brexit has slowly but surely dented international investment.
A quarter of firms said they would relocate some of their UK-based staff overseas if London loses its status as one of the world’s leading finance hubs in the next five years.
David Gauke, head of public policy at Macfarlanes and former Treasury minister, said that although the City retained many strengths “a number of factors – including political uncertainty, Brexit and increased international competition – mean that we cannot be complacent that it will always be at the very top.”
In response to these concerns, Chancellor Jeremy Hunt announced a package of reform in December last year known as the Edinburgh reforms. The reforms are designed to “unlock investment and turbocharge growth” by repealing “burdensome pieces of retained EU law”.
The government has already passed its flagship Financial Services and Markets Bill, which empowers regulators to make decisions previously made it an EU-wide level. Policymakers hope that this will allow the UK to create a more nimble regulatory framework.
A UK finance spokesperson praised the “the vital reforms” taking place.
“Financial services is one of the UK’s most important sectors and exports, which is why it needs to remains strong and internationally competitive,” they continued.
While the government has continued to stress the benefits of Brexit, nearly 80 per cent of respondents said better relations between the UK and EU would help enhance London’s status.
More broadly respondents argued that the City needed to attract international talent. Two fifths said that there should be a relaxation of immigration rules for skilled workers.
“The UK needs to demonstrate that we are committed to being an open economy, willing to attract talent and investment here, prepared to embrace innovation but also capable of providing political and regulatory stability,” Gauke said.