Ruth Lea Opalesque Industry Update - The City of London is still the top financial centre for now believes Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, who discusses the economic importance of and the challenges to the City of London in a new paper.
Her major conclusions are:
- The City of London, in particular, and the financial sector more generally are economically very significant. According to the City of London Corporation the City produced nearly 3% of national income in 2010. The City also made a major contribution to the balance of payments (£35bn) and the financial sector contributed over 11% of total tax revenue in FY2009.
- According to the Z/Yen Group’s 9th report on the Global Financial Centres Index (GFCI9, March 2011), London was still the top financial centre, with New York close behind. But the financial services “centre of gravity” is shifting towards Asian centres, specifically, and the emerging markets more generally.
- Several reports commissioned for the City of London Corporation show concerns over lost competitiveness, with the risk of “over-regulation” and high personal and corporate taxes at the top of their list of concerns.
Ruth Lea said: “There is much discussion about a “desirable” switch from financial services to manufacturing industry in order to “rebalance the economy”. There is, in itself, nothing wrong with this objective. But if it comes about through the neglect of the City’s international competitiveness, the whole economy would be damaged. Concerns over lost competitiveness should act as wake-up calls for policy makers if they wish to maintain London as a supremely important financial centre.”