London tops global financial centre ratings but now on par with New York and being challenged by growth in Asia, index shows

London and New York are the two leading financial centres in the world, after being placed joint top in the latest Global Financial Centres Index. But London is losing out to other European centres including Frankfurt and Zurich.

  The data was collected between July and December 2009, a period of considerable volatility as the global economic recovery got underway and it points out that considerable challenges still face financial centres.
 
Despite remaining top London lost 15 points in its ranking, one of only four centres to see a decrease in its ratings. The others were Shenzhen down 25 points, Guernsey down six points and Dublin lost one point.
 
Also New York and London lead the table of the financial centres believed to have suffered most in the worldwide financial crisis followed by Dubai, Reykjavik and the Cayman islands.
 
Jersey is the only offshore jurisdiction in the top twenty most competitive global financial centres. It is in 18th place overall, ahead of neighbouring Guernsey which has fallen to 22. The Isle of Man if places 24th and the Cayman Islands at 28th.

Asian centres have made considerable gains with Hong Kong, Singapore, Tokyo, Shanghai and Beijing, in particular, all recording strong performances. Indeed, it is these centres that present the biggest challenge to London and New York, the report says.
 
All eyes are likely to be on London and pproposed measures to address fiscal deficits and to put in place new frameworks for regulation and supervision of financial services post economic crisis. One reason given for London’s decline is that other European centres are catching up, most notably Frankfurt and Zurich. London’s lead over Paris and Geneva is also less significant than it was six months ago.
 
‘Retaining a fair, consistent and predictable tax policy and supervisory environment is critical to retaining London’s role as a global centre for a large range of financial services and this also requires our retaining open markets for the UK and our encouraging them

Globally,’ said Stuart Fraser, chairman of the policy and resources committee for the City of London.
 
‘It is significant in this connection that Hong Kong and Singapore retain their ratings as the leading financial centres in Asia in the current report, but that there is continuing uncertainty about second-tier Asian centres,’ he added.

Overall there is more optimism than six months ago but it is still muted, the report points out. ‘The challenges to be faced over the next few years in reaction to the financial crisis and any reading of relative rankings needs to take account of a very large uncertainty factor. That said, the top-ranking centres have shown a much greater degree of stability in their perceived competitiveness to practitioners and are responding more robustly to the economic recovery,’ said Fraser.