By Sascha O'Sullivan
New York, Singapore and Paris are all snapping at our heels to steal London’s investment, jobs and businesses, writes Chris Hayward.
Attention on financial services has been high in recent weeks, following Jeremy Hunt’s budget, the Bank of England raising interest rates again, and turbulence in the banking sector.
Our leading economic actors have taken big decisions with big impacts, which have drawn significant public interest. Perhaps less well known though is the broader impact of our industry across the country.
Financial and professional services firms employ over seven per cent of the UK workforce: over 2.3 million people, two-thirds of whom are outside London. We have outstanding fintech clusters in Manchester and Belfast; the Centre for Finance, Innovation and Technology has just launched in Leeds; and Edinburgh is home to banking excellence.
Collectively, financial and professional services produced £278bn in economic output in 2022 and contributed nearly £100bn in taxes in 2020, providing over 13 per cent of the UK’s total tax revenue.
The success of this industry is in the national interest. If companies start choosing to list or trade elsewhere, or move their entire businesses, that should be a national concern.
At present, there are numerous global competitors who want to take our position as the world’s leading financial centre. New York, Singapore, and Paris are all snapping at our heels to attract businesses, jobs, and investment.
Last week, the City of London Corporation published our annual global competitiveness study, showing that for the first time, London is not the clear choice for financial and professional services. Instead, we jointly lead the way with New York.
London was still the only financial centre to consistently perform well across the five major categories: innovation, financial reach, infrastructure, talent, and business environment. Indeed, London retained its position as the most innovative ecosystem in the world.
In sustainable finance in particular the City is leading the pack. Net zero offers huge opportunities: mobilising private sector investment into the green economy, supporting carbon intensive sectors to transition and providing clarity around disclosures and ratings will help give firms the confidence to press ahead with their plans.
But competitors, such as New York, are continuing to make great strides in areas such as tech investment. In the meantime Singapore is producing a growing number of highly skilled, well-qualified graduates alongside being at the frontier of the digital revolution.
The Financial Conduct Authority (FCA) is looking to launch a consultation to see how the listing environment can be improved – and this is a good thing. The UK is home to some of the most innovative start-ups and fintechs. There are 135 unicorns in the UK. In 2022, the UK saw more fintech investment than Japan, Singapore, Hong Kong, France, and Germany combined. But for these firms to list in the UK, they need to be nurtured.
We need to continue to fight for our competitive edge. In the longer term, we need a sense of direction for financial and professional services.
The City Corporation, alongside influential figures in the industry such as Lloyd’s, Schroders and KPMG, is putting together a roadmap for the future, which will contain recommendations for the government and the broader sector to reinforce our position.
Delivered successfully, it will ensure the UK remains a competitive, attractive, and leading place for financial and professional services for the end of the decade and beyond.
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