London continues to hold the top spot for financial and professional services in terms of overall offer when compared to other global destinations, including New York, Singapore, Hong Kong, Paris and Frankfurt.
Research released by the City of London Corporation is the second annual study of the UK’s global offer to business and looks at 95 different metrics, adding new areas including green finance activity across all asset classes compared to the previous year.
While responding to the challenges of the past twelve months, the UK continues to perform strongly across all key dimensions.
The research shows it maintains a lead as an innovative ecosystem, its financial markets are boosted by international activity and its financial services regulatory regime remains the most favourable in the world.
London received an overall competitiveness score of 61, followed by New York (58) and Singapore (53). The rankings were rounded out with Frankfurt (45), Hong Kong (39) and Tokyo (36). For the first time, the research includes Paris as a second European comparator centre, with a competitiveness score of 41.
Key areas where London and the UK excel on the global stage include:
The UK’s international financial reach continues to be unmatched. Against the backdrop of a challenging year, UK financial services exports increased and the UK’s trade surplus remains higher than in all other global financial centres.
London is Europe’s capital for tech and innovation, home to more than a quarter of Europe’s unicorns.
London increased its share of headquarters of Fortune Global 500 firms by more than a third.
London and the UK remain Europe’s leading destination for investment in financial services and remain the world’s leading foreign exchange trading centre.
The UK is Europe’s leading centre for asset management and its global market share is increasing again. It also remains the biggest centre for issuance and trading of international bonds.
More than a quarter of posts on executive committees of financial services firms in the UK are held by women, putting the UK ahead of other centres.
The report also identifies areas to improve the UK’s competitiveness as a financial centre.
Workforce and wider population skill levels in the west trail those in the east. Singapore, Hong Kong and Japan scored best in this category, with the UK in the bottom half of results although ahead of Germany, France and the US.
UK policymakers need to guarantee that its businesses continue to enjoy unrivalled access to the best of global talent. Withdrawal from the EU, the end of freedom of movement and the introduction of a new immigration system have damaged perceptions of the UK as an attractive business environment for international talent in recent years.
The total tax and contribution rate of UK-based financial services firms, in particular banks, is relatively high. The UK’s tax rates must remain internationally competitive to support the sector in continuing to create jobs and spreading prosperity across the country.
Broadband speeds in the UK are increasing, but not fast enough, and remain the slowest of all global financial centres. The UK has one of the strongest cyber security frameworks worldwide but the country’s digital infrastructure – including the capacity of secure internet servers – needs an upgrade.
Investment is needed in London and the UK’s transport infrastructure, which is crucial to build a more competitive business environment and achieve net zero.
Policy Chair at the City of London Corporation, Catherine McGuinness, said: “Despite the challenges of the past year, the UK’s financial and professional services sector has proven resilient and supported the wider economy throughout the pandemic.
“But for the UK’s future success we must continue to build on our strengths, and cannot afford to be complacent.
“In order to remain globally competitive, we must future-proof the sector by improving digital skills and infrastructure. Our tax rates must remain globally competitive and, crucially, we need to remain open – and be seen to be open – to the very best talent from across the globe.
“This will be key for our financial and professional services sector to fulfil its role in tackling climate change and driving the recovery from the COVID-19 pandemic.”