London slips further behind New York in financial centre rankings

New York seized the top spot from London last year, ending the city’s five-year stint as the world’s premier financial capital, according to the twice-yearly global financial centres index compiled by consultancy Z/Yen. Although there has not been the exodus of workers from the financial sector predicted in the months after the Brexit vote, banks and other financial services companies have been reluctant to invest while they lack clarity on how they will be able to conduct their business. That has been a boon to other European cities, including Dublin, Frankfurt, Amsterdam and Paris, which have attracted groups that need to set up EU headquarters in anticipation of the loss of passporting — the ability to offer services across the EU from a London base — after Brexit.

On current trends, Paris and China’s financial centres are on track to overtake London within the next two years. Paris jumped more than 10 places in the latest index, making it the fourth highest ranked European city after London, Zurich and Frankfurt. “London remains second, but the signs for the future are worrying with Asian and other European centres showing strongly,” said Michael Mainelli, executive chairman of Z/Yen. “Policy uncertainty, Brexit, trade wars and geopolitical unrest are causing more volatility in financial centre performance.”

The French capital’s efforts to woo banks and other financial institutions have been helped by the relocation of the European Banking Authority to the city from London, which completed in June. Bank of America is among those to have shifted operations to Paris. Its Brexit plans involve creating a 500-strong trading business in Paris, as well as shifting $50bn of banking assets to Dublin. “Sustained Brexit uncertainty is leaving business with its hands tied, reluctant to make everyday decisions on recruitment, expansion and investment,” said Catherine McGuinness, policy chair at the City of London Corporation. “Day by day, as uncertainty persists, so does the threat of more businesses moving jobs and operations away from the UK.”

Recommended FT Trading Room London strengthens grip on currencies market, BIS survey shows All of the top five-ranked cities — which also include Hong Kong, Singapore and Shanghai — lost ground in the latest rankings, although their positions in the index remained unchanged. Shenzhen, Sydney and Dubai were among those that improved their position. Miles Celic, chief executive of TheCityUK lobby group, warned that the index should serve as a lesson for European cities about international competitiveness. “Today’s index . . . sends a striking warning signal to Europe about the growing global dominance of Asian and North American financial centres,” he said. “Europe boasts only three centres in the top 15, and of these, just one will be within the EU post-Brexit. With European economies facing significant economic headwinds, it is vital that policymakers keep a sharp weather eye on wider European competitiveness.”

Despite the pressures from Brexit, some areas of London’s financial services industry have remained resilient. On Monday, a triennial survey by the Bank of International Settlements found that London had strengthened its grip as the global centre for foreign exchange and trading of over-the-counter derivatives such as interest rate swaps.