New York topples Brexit-hit London
New York has overtaken London as the world’s most attractive financial centre, a survey said on Wednesday, as Britain’s decision to leave the EU prompts banks to shift jobs out of the city to keep access to Europe’s single market.
Brexit poses the biggest challenge to the City of London’s finance industry since the 200709 global crisis, since it might mean banks and insurers lose access to the EU, the world’s biggest trading bloc.
New York took first place, followed by London, Hong Kong and Singapore in the Z/Yen global financial centres index, which ranks 100 centres on factors such as infrastructure and access to quality staff.
London’s score fell by eight points from six months ago, the biggest decline among the top contenders.
The survey’s authors said this reflects the uncertainty around Britain’s EU departure on March 29, 2019. “We are getting closer
and closer to exit day and we still don’t know whether London will be able to trade with all the other European financial centres,” said Mark Yeandle, the co-creator of the index.
“The fear of losing business to other centres is driving the slight decline and people are concerned about London’s competitiveness,” he said.
Some of the world’s most powerful finance companies have begun moving staff from London to countries that will remain in the EU bloc to preserve the existing crossborder flow of trading.
Financial services firms, which account for about 12% of Britain’s economic output and pay more tax than any other industry, potentially have a lot to lose from the end of unfettered access to the EU.
About 5,000 roles are expected to be shifted from London or created in the EU by March, a Reuters study published earlier in 2018 found.
Asian competitors are closing in, with Hong Kong only three points behind London, according to the survey.
The rankings, based on nearly 2,500 respondents in the industry, provide a twice-yearly guide to the relative performance of financial centres.
Other European centres moved up in the global rankings. Zurich rose to ninth place from 16th six months ago and Frankfurt to 10th from 20th, while Amsterdam climbed to 35th place from 50th.
The number of banks saying they plan to set up new EU subsidiaries after Brexit has picked up in the past year. Most major US, British and Japanese banks said they would build up operations in Frankfurt, Paris or Dublin.