According to a recent poll conducted by Lloyds Bank, London’s status as one of the world’s top finance capitals may be under threat. The survey, which targeted executives at major corporations, revealed that 64% of respondents believe the City of London will stagnate in comparison to its global rivals.
The City of London, also known as the City, is a historic financial district that houses the London Stock Exchange and the Bank of England. It has long been considered one of the leading financial centers alongside New York.
“The City of London’s status as a leading financial center is at an inflection point,” said Lisa Francis, managing director at Lloyds Bank Corporate and Institutional Banking, in an interview with business-focused newspaper City A.M.
This loss of confidence in London’s financial prowess can be attributed to several factors. A number of companies have chosen to abandon London’s listed markets in favor of other major stock exchanges. One notable example is UK chip designer Arm, which decided to debut on New York’s Nasdaq stock exchange after the British government failed to convince them to list in the UK.
The survey also revealed that a quarter of companies would consider relocating some of their UK-based staff overseas if London loses its status as a leading finance hub in the next five years. This poses a significant risk to London’s economy and job market.
Factors contributing to this potential decline include political uncertainty, the impact of Brexit, and increased international competition. David Gauke, head of public policy at Macfarlanes and a former treasury minister, emphasized the need to address these concerns, stating, “We cannot be complacent that London will always be at the very top.”
In response to these challenges, Chancellor Jeremy Hunt announced a package of reforms known as the Edinburgh reforms in December. These reforms aim to “unlock investment and turbocharge growth” by repealing burdensome pieces of retained EU law. One key development is the passing of the Financial Services and Markets Bill, which grants local regulators the authority previously held at an EU-wide level.
The survey revealed that 80% of respondents believe better relations between the UK and the EU would help enhance London’s status as a leading financial center. Furthermore, 40% of respondents suggested a relaxation of immigration rules for skilled workers as a means to boost London’s competitiveness.
Gauke highlighted the importance of demonstrating openness, attracting talent and investment, embracing innovation, and providing political and regulatory stability. This, he argues, will be crucial for London to maintain its position as a global financial powerhouse.
The potential decline of London as a top financial center serves as a reminder for the UK to reevaluate its strategies and make necessary adjustments to remain competitive in a rapidly changing global financial landscape. Maintaining strong relations with the EU, streamlining regulations, and attracting skilled workers will be pivotal in securing London’s position as a global leader in finance.