As published on theguardian.com, Monday January 27, 2020.
New York remains the world’s leading financial centre, pushing London further into second place as Brexit uncertainty undermines the UK capital and Asian centres catch up, a survey has found.
The UK will leave the EU on Friday with future access to its biggest financial services customer uncertain after a business-as-usual transition period ends in December.
Duff & Phelps’s Global Regulatory Outlook survey of 245 senior officials from asset management, banking and other financial firms from across the world found that New York has extended its lead over London.
It said 56% of respondents regard the US financial capital as the world’s most important money hub, up 33 percentage points over the past two years. Only 33% see London as the foremost global financial hub, down more than 20 percentage points over the past two years.
“It is difficult to avoid the suspicion that three years of uncertainty since the Brexit vote has contributed to London’s fall,” said Monique Melis, the managing director at Duff & Phelps.
Both New York and London are set to lose ground over the next five years, with Hong Kong, Singapore and Shanghai expected to achieve the biggest growth, the survey showed.
Just 22% predicted London would still be the biggest financial centre in five years’ time, the survey showed. Few respondents expected Paris, Frankfurt or any other European city to come close to replacing New York or London.
Respondents favoured London over New York in terms of the most favourable regulatory regime for financial services in the world.
“If the government can position the UK as having a more favourable regulatory environment and separate it from the red tape of European regulation, then we may see the UK win back its crown and attract new talent to the sector,” Melis said.
London has shown resilience since the UK voted in 2016 to leave the EU by leapfrogging New York to become the top centre for trading interest rate swaps and remaining leader in currency trading.