Should we place faith in a survey, conducted in June but published this week, that says London is still the world’s pre-eminent financial centre? Yes, in the sense that no one challenges that long-standing claim as of today; no, in the sense that complacency would be a huge mistake while every financial firm operating in the City, the West End and Canary Wharf is busy making contingency plans for a bad Brexit outcome.
The gist of the six-monthly Z/Yen ‘Global Financial Centres Index’ — which assesses 92 cities around the world, taking account of everything from telecoms infrastructure to homicide rates — is that London has held its own at the top where it has always been, while Frankfurt has risen from 23rd to 11th place and improved its rating, which is the survey’s measure of perceived confidence and quality. Other European contenders such as Luxembourg, Paris and Dublin also moved up, but are not serious threats. More interestingly, New York (which held on to second place) saw its rating drop sharply, while several other major US cities moved downwards: ‘presumably due to fears over US trade’, say the survey’s authors.
So Donald Trump, with his protectionist rhetoric, is London’s friend for the time being — but will be much less so if he succeeds in deregulating the US financial sector, a move which Morgan Stanley thinks he can do without Congressional support and which could boost Wall Street’s earnings by more than 15 per cent. That would draw many American bankers back from London, while the tide of jobs migrating to Frankfurt and elsewhere in the EU, though still quite small, is only likely to grow throughout the period of Brexit uncertainty and transition: most pundits agree that some tens of thousands will eventually go. London’s in-built advantages as a financial centre — language, law, space, staff, lifestyle and time zone —will keep it in the lead for the time being, but City chiefs face a fight on all fronts to stay there, and nothing in the Brexit talks so far can have reassured them.