New York overtakes London as world’s financial capital
Most financial services executives think Brexit chaos is to blame
New York has superseded London as the pre-eminent global financial capital because of turmoil caused by Brexit, leading financial services executives have said in a survey.
Consultancy firm Duff & Phelps released its 2019 Global Regulatory Outlook survey yesterday, having asked 183 leaders in private equity, hedge funds, asset management, brokerage, banking, and policy/government their opinion on the location of the world’s top financial centre.
As CNBC reports “London and New York switched places in the ranking from 2018, with 52% of respondents choosing New York as the globe’s financial hub, while 36% chose London. Last year, 42% chose New York and 53% chose London.”
“Last year, Brexit cast a shadow of uncertainty over the United Kingdom’s economy; it has now escalated to a full-blown crisis,” the report said.
“British government ministers said last week that the UK financial sector would emerge stronger from Brexit”, Reuters notes. However, it also adds that “Duff & Phelps said Dublin, Frankfurt and Luxembourg also fared better this year as the European Union’s financial industry searches for a new hub.”
Sky News quotes EY's UK financial services managing partner, Omar Ali, who said: "The subdued economic picture, Brexit uncertainty and the emergence of some longer-term trends such as the decline in car ownership and continued high house prices are all taking their toll."
Also mentioned in the report are other potential future contenders for the position. “Looking ahead… globalisation’s diffusion of influence begins to be apparent: 12 percent of respondents expect Hong Kong to be the world’sd preeminent financial centre five years from now, a stark contrast to the 3 percent who held this opinion just a year ago.”
The report goes on to address global anti-money laundering and financial terrorism countering efforts, concluding that weakness in that area is not an issue of resourcing but of inter-institutional coordination, as well as further issues pertaining to financial regulation.
This is not the first time Brexit has spelled bad news for the City. Last year, according to Sky News, a “Z/Yen Global Financial Centres Index showed New York overtaking the UK's capital.” The think tank’s index also found that "Zurich, Frankfurt, Amsterdam, Vienna, and Milan moved up the rankings significantly. These centres may be the main beneficiaries of the uncertainty caused by Brexit.”