London remains the undisputed financial capital
Many analysts, market observers and economists had predicted that London would lose the tag as the world’s top financial centre following UK’s exit from the European Union. But it turns out that London continues to remain the undisputed financial capital of the world with the gap between its nearest rival further widening!
According to the 22nd edition of the Global Financial Centres Index (GFCI 22), which ranks 92 financial centres of the world, London continues to dominate the list. Since its inception, the Global Financial Centres Index (GFCI) has fortified itself as the principal instrument for measuring the attractiveness of financial centres. Well-established centres like New York, London, Singapore, Hong Kong, Tokyo have maintained their lead. However, several emerging cities have also been gaining traction and made tremendous strides as new economies and financial centres.
There is hardly any change among the top five cities. London and New York remain in first and second places. Interestingly, despite the ongoing Brexit negotiations, London only fell two points, the smallest decline in the top ten centres. The rating for London is 780 while that of New York is 756.
This finding is a major relief to the London business community, which feared exodus of investors. However, this study shows that London continues to remain the preferred hub for investments in many sectors. Though there have been a few exceptions with foreign companies preferring Frankfurt and Dublin over London, by and large, the situation remains favourable for the UK.
Investments into the London property market, especially the commercial segment, has reached record levels, so far, this year. Besides, international investment into London real estate, especially from Asia, has more than doubled in view of the strong fundamentals of the property market, backed by the fall in sterling. More investment is expected to flow into the UK in the remaining three months. Besides, well-known technology companies have picked office space in leading commercial developments in London reaffirming their faith in the capital. This proves that London has remained attractive for global investors despite multiple challenges in the last 16 months.
Hong Kong has moved just ahead of Singapore into third – only two points ahead on a scale of 1,000 while Tokyo remains in fifth position. The gap between third place Hong Kong and second place New York is now only 12 points. This is the smallest gap between second and third places for over five years. New York fell by 24 points, the largest fall in the top 15 centres, presumably due to fears over US trade.
London ranks Number 1 in all the instrumental factors used in the GFCI model to be grouped into five broad factors of competitiveness: Business Environment, Human Capital, Infrastructure, Financial Sector Development, and Reputation.