The UK has held onto its place as the main European financial hub, but Asia is catching up, according to a new report from the New Financial think-tank.
While the report relies on data from 2019 — before Brexit came into effect- it underlines the City’s lead over European rivals as a hub for derivatives and foreign-exchange trading, asset management, venture capital and banking.
New Financial’s ranking places the UK in a stronger position than other analyses due to its reliance on the value of activity rather than qualitative metrics. This puts the country’s financial markets at three times the size of France’s or Germany’s.
Asian markets though are on the march, with China, Japan, Hong Kong and Singapore all beginning to make their mark. International activity increased in t by more than 50%.the latter two rose by over 50%
The City of London is particularly dominant in trading and clearing plus it has the largest chunk globally for foreign exchange and derivatives trading, and the second biggest market for clearing and foreign equity trading.
However, although the UK is still ahead of its European rivals, the report shows it is well behind the US which is home Wall Street – the largest financial hub.
The US has a score of 84 on the index compared to the UK’s 35, and there are concerns activity here has started to stagnate since the Brexit referendum.
A separate report from Deloitte and IHS Markit shows that The City is also in danger of losing business. In March alone, it saw £2.3 turn of its lucrative derivatives trading business lave, with Wall Street trading platforms gaining the most.
More business may also shift away from London because the EU does not seem to be in a rush to grant equivalence and the recent memorandum of understanding is not expected to bear any cooperative fruit.
To date, New Financial analysis shows that over 440 financial services firms have shifted jobs to the EU because of Brexit and firms have moved £900bn to the EU.
New Financial found domestic activity has declined somewhat since the referendum with average growth in the UK at zero percent compared with 16% globally and 14% within the EU.
The UK has a much smaller local financial centre. It ranks fourth after the US, China, and Japan, with a score of 14, around the same size as France.
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