15 March 2007
City launches new Global Financial Centres Index (GFCI)
New research has established, for the first time, an index of
competitiveness between 46 of the world’s financial cities.
The Global Financial Centres Index (GFCI), launched today, shows
London and New York as the only two truly global financial centres,
well ahead of the two Asian centres of Hong Kong (3rd place) and
Singapore (4th place). Zurich is in 5th place, just ahead of
Frankfurt.
London is currently ranked ahead of New York by five points and
leads in all five areas of competitiveness – people, business
environment, market access, infrastructure and general
competitiveness.
However, the report highlights widespread concerns about the UK
tax regime, relative to its competitors.
Michael Snyder, Chairman of Policy and Resources at the City of
London Corporation which represents UK financial services, said:
“To maintain competitiveness, the UK must take action to address
concerns over its corporate tax environment.”
The GFCI shows a change in emphasis of the areas of
competitiveness. Currently, the regulatory and tax environments are
judged to be the biggest contributors to overall competitiveness.
This compares to the City of London’s 2005 report “The Competitive
Position of London as a Global Financial Centre”, in which
respondents rated people and skills as the most important factors
in competitiveness.
It also highlights the changing nature of Asian financial
market, with Hong Kong rated third and considered to be a real
contender to become a global financial centre. Singapore falls in
fourth place, with the emerging markets of Shanghai (24th place)
and Beijing (36th place) some way further down the table.
Mr Snyder added:“This index will prove to be an invaluable tool
for tracking changing fortunes and perceptions of financial
centres.”
Other key findings from the research include:
- London and New York are the only two global financial centres.
Hong Kong is an international financial centre.
- Regulation is currently cited as a decisive factor in the
competitiveness of London and New York. Too onerous a regulatory
environment can directly affect the competitiveness of a financial
centre.
- Current thinking is that Shanghai and Tokyo are unlikely to be
global centres. Hong Kong seems the most likely Asian city to
emerge – assisted by a strong regulatory system and a well-skilled
financial services workforce. But the future of Asia is still the
subject of conjecture.
- The commercial property prices in London are not currently
hindering competitiveness in financial services.
- London is falling behind other cities when it comes to the
development of its transport network.
The GFCI, conducted by Z/Yen for the City of London Corporation
and with additional data from PricewaterhouseCoopers, is the first
of what will be a biannual index of competitiveness for 46 world
financial centres, charting how they rate relative to each other on
an on-going basis.
The index brings together the results of online surveys
completed by financial services leaders and 47 separate indices of
competitiveness. Further surveys will follow, incorporating greater
geographical coverage and additional instrumental factors.
It is hoped that the publication of future indexes will chart
the shifts in position of financial centres and help answer
questions such as:
- How quickly can a financial centre gain or lose ground on
its competitor?
- Can you build a major financial centre from scratch
(monitoring Dubai)?
- Is it inevitable that a global financial centre will
develop in Asia as the economic power of the region
grows?
The Top 10 Financial Centres Compared
|
London |
1 |
765 |
Most key success areas are excellent - London is in the top
quartile in over 80% of its instrumental factors. Especially
strong on people, market access and regulation. The main
negative comments concern corporate tax rates, transport
infrastructure and operational costs. |
|
New York |
2 |
760 |
Most areas are very strong - New York is also in the top
quartile in over 80% of its instrumental factors. People and
market access are particular strengths. Our respondents cited
regulation (particularly Sarbanes-Oxley) as the main negative
factor. |
|
Hong Kong |
3 |
684 |
Hong Kong is a thriving regional centre. It performs well
in all of the key competitiveness areas, especially in
regulation. Headline costs are high but this does not detract
from overall competitiveness. Hong Kong is a real contender
to become a genuinely global financial centre. |
|
Singapore |
4 |
660 |
Most areas are very good and banking regulation is often cited
as being excellent. It performs well in four of the key
competitiveness areas but falls to 9th place on general
competitiveness factors alone. Definitely the second Asian
centre just behind Hong Kong. |
|
Zurich |
5 |
656 |
A very strong niche centre. Private banking and asset
management provide a focus. Zurich performs well in three of
the key competitiveness areas but loses out slightly in people
factors and in general competitiveness. |
|
Frankfurt |
6 |
647 |
Despite a strong banking focus, suffers from inflexible labour
laws and skilled staff shortages. Market access,
infrastructure and business environment are strong but Frankfurt
falls outside the top ten GFCI rankings for people and general
competitiveness. |
|
Sydney |
7 |
639 |
A strong national centre with good regulation, offering a
particularly good quality of life. Sydney is strong in four
of the key competitiveness areas but falls outside the top ten for
people - many financial professionals leave for larger
English-speaking centres. |
|
Chicago |
8 |
636 |
Number two centre in the US. Hampered by the same regulatory
regime as New York. It scores highly for people but is let
down by its infrastructure and market access rankings.
Unlikely to overtake New York, it remains a powerful regional and
specialist centre. |
|
Tokyo |
9 |
632 |
Does not fare well in terms of regulation and business
environment, but the size of the Japanese economy means Tokyo has
good liquidity. It fares poorly on people but has good
infrastructure and market access. |
|
Geneva |
10 |
628 |
A strong niche centre similar to Zurich. Private banking
and asset management continue to thrive. Geneva is strong in
business environment and general competitiveness but let down by
infrastructure. |
* - the theoretical maximum GFCI rating is 1,000
Download the report
Ends
Notes to editors
The report will be launched by Michael Snyder, Chairman of
Policy and Resources at the City of London and Michael Mainelli,
Director of Z/Yen on Thursday 15th March 2007 at 10am at the
international property conference MIPIM. Seminar address: Deauville
Room, 1st Floor, Majestic Hotel, 14 Boulevard de La Croisette,
Cannes, France. Issues for discussion include how property
availability, cost and quality interact with wider factors to make
cities more or less competitive in attracting financial service
firms.
City of London Corporation:
The City of London Corporation is committed to maintaining and
enhancing the status of the wealth and tax-generating business of
the City as the world's leading international financial and
business centre through its policies and services. Examples are the
extensive overseas business missions headed by the Lord Mayor on
behalf of UK-based financial services and the wide-ranging economic
development, research and regeneration effort the City of London
Corporation undertakes across London. It also runs the City Office
in Brussels on behalf of the City and City Representations in
Beijing, Shenzhen and Shanghai – and a City Office in Mumbai.
Although the City of London Corporation provides local government
services for the City, the financial and commercial heart of
Britain, its responsibilities also extend far beyond the City
boundaries and include management of the Barbican Centre, Central
Criminal Court at the Old Bailey, Epping Forest, Hampstead Heath,
three wholesale food markets, as well as acting as the London Port
Health Authority – and running the Animal Reception Centre at
Heathrow.
Press enquiries: Lesley Mair: +44 20 7332 1754 or +44 7785 528
453.