London has retained its position as the world’s top financial centre despite fears that the City will become less attractive for financiers in the wake of Brexit.
New York – London’s closest rival and expected beneficiary of the fallout from the UK’s leaving the EU – has fallen further behind amid uncertainty about Donald Trump’s views on free trade.
The Z/Yen global financial centres index (GFCI), which ranks 92 financial centres, found that New York’s ratings score had fallen by 24 points – the largest fall among the top 15.
London’s total score fell by only two points this year. “Interestingly, despite the ongoing Brexit negotiations, London only fell two points, the smallest decline in the top 10,” the report said.
Frankfurt rises to 11 in the table from 23 a year ago, while Dublin moves to 30 from 33. Both are among the EU centres battling for business that will leave London as a result of Brexit.
The issues that financial firms will consider when deciding where to move may not just be based on business factors. Sir Howard Davies, chairman of Royal Bank of Scotland, on Monday pointed to the importance of education systems when moving financiers out of the UK.
“The biggest issue [in relocating staff] is schools....The capacity of international secondary schools in Frankfurt is probably the biggest question on the minds of human resources directors in London”.
He indicated that financiers relocating may have to leave their children at schools in the UK.
His remarks on Bloomberg TV come after a speech by John Cryan, chief executive of Deutsche Bank, who also mentioned the importance of schools if Frankfurt was to win business from the UK.
Cryan had said Frankfurt was the only EU centre which had the infrastructure to handle activities that had taken place in London. But, Cryan said, it was up to Frankfurt to decide how much business to take, and also pointed to the issue of schools.
He said Frankfurt needed “more attractive, urban residential areas, enough international schools and a dozen additional theatres and a few hundred restaurants.”
Carsten Brzeski, chief economist at ING in Frankfurt, said international schools needed to make preparations. “This would require finding land and investors. [The] big question is whether the state government of Hessen would be willing to actually give some money as well.”
Davies told Bloomberg that contingency plans for the UK leaving the EU would need to be rolled out on the basis of a hard Brexit – without a trade agreement or any implementation period. “The longer it goes and the closer it gets to March 2019, you will just have to implement that.
“The clock is ticking, and in the City people are making contingency plans, and at the moment they can only make them on the basis of a hard Brexit... so the longer it goes, the more likelihood it is those ‘hard Brexit’ plans will be implemented,” said Davies.
He said the government was going to have to start “warming up” people to the fact there will be a bill for the UK to leave the EU.
A number of major firms have announced their Brexit plans. Bank of America has selected Dublin as the location for some of its activities while JP Morgan Chase has bought a new office in Dublin’s docklands area that can house up to 1,000 staff.
Morgan Stanley has picked Frankfurt and could relocate about 200 staff there while Citi is expanding in in the German city.
This article was written by Jill Treanor, for theguardian.com on Monday 11th September 2017 13.52 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010