City still leads world, but New York closes gap as Brexit looms

IS London’s position as the largest international centre of finance slipping as a result of Brexit?

London has been a critical artery for the flow of money around the world for centuries. The financial services sector accounts for about 12pc of Britain’s economic output, employs about 1.1 million people and pays more taxes than any other industry.

Its only rival, New York, is centred on US markets, while London has more banks than any other hub, dominates markets such as global foreign exchange and commercial insurance and is home to international bond trading and fund management.

But about a third of the transactions on its exchanges and in its trading rooms involve clients in the European Union. These may be jeopardised after Brexit unless Britain manages to maintain similar levels of access to the trading bloc.

The French finance minister predicts Paris will overtake London as Europe’s most important financial centre in a few years, although supporters of leaving the EU say Britain will benefit over the long term by setting its own rules.

London remained top of the rankings in the annual Global Financial Centres Index released this week by commercial think-tank Z/ Yen Partners and the China Development Institute, although the gap between it and New York closed to one point on a scale of 1,000 and its rating rose by less than the other four top centres.

Almost a year before Britain is due to leave the EU, Reuters’ second Brexit tracker, which monitors six indicators to help assess the City’s fortunes, taking a regular check on its pulse through public transport usage, bar and restaurant openings, commercial property prices and jobs, suggests London’s financial districts have been held back, but there is no evidence of a mass exodus.

“London has not come close to taking a mortal blow or anything like it ... The increasing uncertainty though over London’s future has led to a stall in its growth,” Michael Mainelli, chairman of Z/Yen, said.

Firms employing the bulk of UK-based workers in international finance told Reuters that the number of finance jobs they plan to shift out of Britain or create overseas by March 2019 due to Brexit has dropped to 5,000, half the figure of six months ago.

This comes amid more conciliatory signals from British Prime Minister Theresa May, while progress in talks with the EU have prompted some companies to delay large staff moves.

The findings suggest that the first wave of job losses may be at the lower end of initial industry estimates, meaning London will keep its place as the continent’s top finance centre in the shortterm.

London’s finance industry should emerge largely unscathed from Brexit even if thousands of jobs move, the City of London’s political leader Catherine McGuinness says, adding that it could take years to feel the full impact of Brexit.

The number of available jobs in London’s financial

services industry fell the most in six years in 2017, said recruitment agency Morgan McKinley, which hires staff in finance.

It bases its number on the overall volume of mandates it receives to find jobs and applies a multiplier based on its market share of London’s finance industry.

The recruiter found 82,147 new financial services jobs were created last year, a 12.45pc drop on a year earlier.

This is the lowest number of jobs available since 2011. (Reuters)