London Risks Losing Financial Hub Status
UNITED KINGDOM – A lobby group has warned that London could lose its status as a major global financial centre if the authorities fail to amend tax and labour rules as well improve policies to boost trade connections and expand into new markets, reported the Financial Times (FT) on Tuesday morning (7 September, SGT)
One of London’s primary lobby groups, TheCityUK, believes that the capital’s status as a top global financial centre has deteriorated compared to its largest rivals like Hong Kong and New York in the past 10 years, specifically in terms of worldwide market share for insurance premium-writing, and cross-border bank lending, as well as pension and hedge fund assets.
As such, the lobby group worked with 60 financial services associations to devise a strategy that would help the country “regain financial centre leadership in 5 years”.
Although London is still one of Europe’s top financial centres since Brexit, the government needs to do more to match the growth of rivals, said TheCityUK’s CEO Miles Celic.
“Europe is littered with cities that were once the leading international centre of their day. The last decade has been one of growth for our industry, yet global competitors have grown faster.”
Notably, authorities in the United Kingdom have partly focused on incorporating the European Union’s financial services rule book. Following extensive consultation with the market, the government is planning to revise regulations on insurance and bank capital requirements, as well as on trading of shares, bonds, and commodities. During the summer, the authorities also revised some standards to lure more blank-cheque firms to list on London’s bourse.
TheCityUK said lawmakers should make sure the proposed amendments are fully passed, including permitting dual ownership share structures to attract more international IPOs, in addition to changing listing rules to foster more alternative assets in UK markets.
The lobby group also urged the government to implement more sweeping changes to rules that plays an important part in the decision-making of senior executives, like speeding up the long processing times for sponsoring skilled staff and reducing the cost for sponsoring such manpower into the UK.
Furthermore, TheCityUK underscored that the financial services in the country is taxed “considerably more than rivals in competitor financial centres” such as Singapore, Hong Kong, Frankfurt, and New York.
While it described the authorities’ review of the bank surcharge as “encouraging”, it also called on lawmakers to expand the existing VAT treatment on the UK management of overseas funds to the management of similar UK vehicles.