London is back on top as the world’s undisputed number one financial centre, according to research carried out by the Square Mile’s own local authority.
The Corporation of the City of London’s annual ranking exercise put arch rival New York into second place, after the Big Apple tied with the Capital for top spot last year.
There are 101 metrics in the benchmarking research, which cover a range of indicators from “reach of financial activity” to “business infrastructure resilience”. The outcome will surprise some, after London has lost out to New York on big-name stock market listings, from companies who see a deeper pool of capital by the Hudson rather than the Thames, meaning bigger valuations over the Atlantic.
And the findings of today’s research conceded that London took a hit from a decline in “capital markets activity and assets under management”. It also warned that rising interest rates could mean “significant challenges to future growth … possibly reducing capital market activity.” Overall, London’s score fell year-on-year, even as its relative ranking rose.
That happened as the 2023 drop in traditional market action was made up for by a top for London in the “sustainable finance” and “talent and skills” categories.
While New York led for “tech” and “wider financial activity”, the end of the bull market period there, which came after Covid, took its score down overall.
The City Corporation said recent overhauls to streamline regulation and make it easier to invest – the so-called Edinburgh Reforms and the Financial Services and Markets Act, as well as the Mansion House Compact, aimed at tech and life sciences – helped the improvement.
Chris Hayward, policy chairman at the City of London Corporation, said: ““I am pleased to see London retain its crown as the leading global financial centre after tying with New York City last year, but our competitive edge must be revived.
“We cannot ignore the challenges we face in our capital markets ecosystem. Further reforms are needed.”
There are over 138 start-up firms valued at over $1bn (£0.79bn) in the UK, more than in France, Germany and Singapore combined. London is home to 104 of them. The City's European rivals Frankfurt and Paris came fourth and fifth respectively, also behind third-placed Singapore.
According to the report,a sset managers, fintech firms and investment banks opening offices in London helped .foreign direct investment rise by 68% to more than £2 billion in 2022. Around 15,000 jobs were created.
It also found that London’s office vacancy rate fell to 7.3%, while New York’s spiked higher to just over a fifth.
Nonetheless, the number of foreign firms listing their shares in the UK dropped, while it rose in the US, showing there is still work to do after London regained its crown, not least in reinvigorating its stock market.
Professor Michael Mainelli, the Lord Mayor, said: “Amid a range of macroeconomic and geopolitical challenges, this latest report shows how the UK’s financial services are key to driving growth and promoting the breadth of specialist expertise available in the City.”
You can read the full report, entitled “Our Global Offer to Business: London and the UK’s competitive strengths supporting economic growth” here.
