London’s scale makes UK dominant financial centre in Europe – second only to the US worldwide
The UK is by far the most important financial centre in Europe, coming second only to the US worldwide, according to a new ranking to be published today.
Britain and the US far outstrip all other competitors, the report by the New Financial think tank found, based on an analysis of 42 different metrics, from the size of financial services industries to the broader business environment.
The UK ranks particularly highly on international factors thanks to the size of the City’s banking sector and its pivotal role in the global financial system.
New Financial’s inaugural ranking highlights that the UK is number one for foreign exchange trading, derivatives trading, and with regard to cross-border banking claims because of the City’s massive international banking operations.
The ranking, which focuses on the quantity of activity carried out in financial sectors around the world, shows that the UK is by far the biggest financial centre in Europe. The UK scores an index reading of 40, well above the next biggest EU rival, Luxembourg, on 26. Germany, France and the Netherlands all scored lower.
The US scored 79, while China scored 29, based on an average of ranking scores out of 100 across the different factors.
William Wright, New Financial’s founder and managing director, said: “London both in terms of domestic financial activity and international financial activity is in a league of its own in Europe.”
The figures highlight the central role that the UK plays in financing economic activity in the EU and across the world, a key factor in ongoing Brexit negotiations.
London’s financial services firms are resigned to a decline in business volumes when the UK leaves the EU, given the loss of the so-called passport which currently allows seamless cross-border trade.
However, Wright said the figures showed that the prospect of London being replaced as Europe’s dominant financial centre was distant, given the current lead enjoyed by the City.
For instance, foreign exchange activity in the UK, centred on London, is nearly twice that of the US, and more than 14 times the size of Germany or France. The report highlights that the UK’s financial services exports are more than four times larger than France’s, and more than twice those of Germany.
Meanwhile, the report highlights the fast catch-up of China, the world’s second-largest economy. China’s big domestic market puts it in third place overall, in spite of its relatively weak – but fast improving – international connections.