This week it was widely reported that New York had “surged ahead” of London as the world’s top financial centre, with uncertainty over Brexit undermining the UK’s global position. In reality, the picture is a little more complicated.
The story was based on a survey of senior financiers in which only 34% said they saw London as the world’s premier financial centre, compared to 56% for New York. This was actually only three points down from the same survey conducted last May: it was between 2018 and 2019 that the UK’s ratings plummeted by 17% and handed New York the top spot. Other surveys have been finding similar results for some time; as long ago as 2018 it was already being reported that London had “lost its crown”.
Of course, market sentiment is not the same as economic facts on the ground, and the stark changes in survey results have yet to translate into stark changes in the shape of the finance sector itself. It would appear that the UK’s net exports of financial services are still growing, and that it remains a globally dominant player in areas such as currency markets (where it accounts for 43% of global forex revenues) and derivatives trading (for which it remains the principal European hub). As of 2018, the UK’s cross-border lending still exceeded that of Germany and France combined. Firms are positioning themselves carefully for all possible Brexit scenarios, with many moving subsidiaries, staff and assets to Frankfurt, Paris or Dublin – but this does not yet appear to have resulted in big changes in London’s financial operations themselves.
