London toppled by New York as top financial sector
Brexit woes strong contributing factor in view of financial executives
More than half of financial executives consider New York to be the world’s pre-eminent financial sector, against just a third for the UK. That compares to last year, when the respective figures were 42 per cent and 53 per cent.
The survey, Global Regulatory Outlook 2020: The Regulatory Landscape Evolves, from Duff & Phelps, surveyed key stakeholders from a wide range of global financial institutions.
“It is difficult to avoid the suspicion that three years of uncertainty since the Brexit vote in the UK has contributed to this fall from grace,” the report says. “Of course, if this is the primary reason, then the resolution of the UK’s departure could see London bouncing back – and its government is likely to fight strongly for a sector that contributes about 7 per cent of the UK economy’s output and £29bn ($38bn, €34bn) in tax revenues.
Trade talks with the EU are just beginning. However, the survey suggests a significant lack of optimism. When asked what city they expect to lead in the next five years, respondents see both London and New York losing ground.
The decline for New York is relatively modest, with 50 per cent still expecting it to be the leader.
Confidence in the UK’s future is far weaker. Just 22 per cent predict London will still be the major force in financial services at the end of the period.
If there is any consolation for London, it is that relatively few see Paris or Frankfurt making great gains. Rather, it is emerging centres in Hong Kong, Singapore and, particularly, Shanghai that are expected to see the major growth.
That may worry the US just as much as the UK, the report suggests.
Within Asia, Shanghai looks to have the brightest future, according to respondents. No one says it is the pre-eminent centre today, but looking five years ahead almost one in ten (9 per cent) see it taking the lead.
That is well behind those who still think New York or London will dominate, but it is well ahead of those naming Singapore (5 per cent) or Hong Kong (4 per cent).
Of the latter two, 18 per cent say Singapore currently has the most favourable regulatory regime for financial services – well ahead of Hong Kong (11 per cent).
Overall, close to one in five (18 per cent) see an Asian jurisdiction leading the financial world in five years’ time.
FURTHER READING: London Stock Exchange posts better than expected figures