London has retained its crown as the top global financial centre as New York City slips to second position, new figures published by the City of London Corporation reveal.

The report, Our Global Offer to Business: London and the UK’s competitive strengths supporting economic growth, benchmarks the performance of the world’s leading financial centres across 101 metrics including a new metric measuring business infrastructure resilience.

Although London saw a decrease in capital markets activity and assets under management, it ranked top in both sustainable finance and talent and skills. New York leads the way in tech and wider financial activity, but its score fell this year as the bull market of the covid period was halted by high inflation and steep interest rate rises.

London’s regulatory quality and openness to businesses through the newly introduced Financial Services and Markets Act and the Edinburgh Reforms landed it in the top position with an overall competitiveness score of 59, down from 60 in 2023, while New York decreased its score by 3 points to 57. Singapore placed third again dropping three points to 48 and Frankfurt sits fourth with 44 and Paris fifth with 40.

The Mansion House Compact unveiled last year outlines measures already being taken to boost UK investments into sectors such as tech, life science and biotech, with 11 of the largest DC pension firms already signatories.  

To drive prosperity across the UK financial and professional sector over the next decade, the City of London Corporation has launched, Vision for Economic Growth. Consulting more than 300 stakeholders across the sector, the report prescribes a roadmap to reforms that can drive innovation and tackle the UK’s decline in capital markets activity. A key proposal from the report is the creation of a financial and professional services council chaired by the Chancellor, and with representatives from regulators and the private sector which would oversee a financial services strategy, as deployed successfully in jurisdictions such as Singapore and Ireland.

Policy Chairman of the City of London Corporation, Chris Hayward, said:

“I am pleased to see London retain its crown as the leading global financial centre after tying with New York City last year, but our competitive edge must be revived. These report findings are a testament to the success of recent regulatory changes which have sparked business optimism by removing barriers to international talent and ease of doing business.

“However, further reforms are needed. We cannot ignore the challenges we face in our capital markets ecosystem. Our flagship report, Vision for Economic Growth, outlines a long-term plan for the prosperity of the UK into the next decade – now is the time for the financial services sector to work closely with Government and regulators to realise this roadmap.”

Lord Mayor of the City of London, Professor Michael Mainelli, said:

“Amid a range of macroeconomic and geopolitical challenges, this latest report shows how the UK’s financial services are key to driving growth and promoting the breadth of specialist expertise available in the City of London.

“With over 104 unicorns in London alone – many of them in the tech sector – it’s imperative that the UK strives to stake its claim as a tech superpower by maintaining its leadership in AI innovation and regulation and implementing world-leading digital transformation.”

London saw significant gains in regulation and talent and skills:

• Foreign direct investment increased 68% from 2021 to 2022 to more than £2 billion as asset managers, fintechs and investment banks opened offices in London creating 15,000 jobs.
• London is the leader in sustainable finance with UK companies committed to ESG and transition policies and investors allocating to sustainable finance strategies.
• London’s office vacancy rates have decreased to 7.3% in 2022 while New York’s has grown to 22.2% – London’s office prices are also half those of New York.
• The UK is the world’s second largest asset management hub with £4.2tn managed for overseas clients.
• There are 138 unicorns in the UK – startups valued at $1bn – more than France, Germany and Singapore combined.

The report also identifies areas for development, including:

• Although London’s rank has improved on a relative basis, there are significant challenges to future growth with higher interest rates possibly reducing capital market activity.
• London’s score fell due to decrease in fund assets under management and capital markets activity.
• The number of foreign companies listed in the UK is dropping. This is in contrast to the US where the number of foreign listings increased.
• Banks in London paid a 45.5% tax rate in 2023, higher than New York (27.9%) and soon to be highest in Europe leaving the UK as the only major financial centre with sector-specific taxes.

ENDS

Notes to editors

Read the full report here: https://www.theglobalcity.uk/insights/global-offer-24

The City of London Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally-successful UK. www.cityoflondon.gov.uk