Press notice 04: Strengthening London’s position as the world’s leading international financial centre

Key stakeholders in London’s financial sector are joining forces with the Government to promote London as the world’s leading international financial centre. Twelve leading London markets and financial sector industry bodies have endorsed plans to set up a high level group to agree before the summer a strategy to consolidate London’s position, recognising the opportunity that emerging markets such as China and India present and the strength of international competition from other financial centres.

Welcoming the news, Chancellor of the Exchequer, Gordon Brown said:

“Britain’s financial services sector, led by the international financial markets of London and other important financial clusters such as Edinburgh and Leeds, provides finance for global businesses and supports development in growing markets like India, China and the Middle East. Together with many business services that support it, including accountancy and law, it is a truly world-class industry and, as testified by its growth over the last ten years, is succeeding in rising to the challenge of globalisation. No other financial centre can match the international scope of Britain’s financial markets, and the Government is committed to supporting and promoting these strengths around the world.

“To realise the full benefit of these opportunities for Britain, the Government and financial services industry need to work together. The Government will join forces with a new financial services group to develop and support a coordinated strategy for promoting Britain’s financial services sector around the world. London is the world’s leading international financial centre, and working together we will achieve our ambition: for London to strengthen its position as the number one financial services centre around the world.”

Notes for editors

1. The Treasury will establish a high level group to include key City stakeholders representing all London’s financial market segments, the Lord Mayor and the Corporation of London, and the Mayor of London. The Financial Services Authority and the Bank of England will also participate in the high level group as observers. The group will develop a coordinated strategy designed to help ensure London’s future success.

2. Twelve leading London markets and financial sector industry bodies have endorsed the Chancellor’s plans in the attached statement, along with the Lord Mayor and the City of London Corporation, the Mayor of London, and UK Trade & Investment, which will be responsible for executive delivery of the strategy.

3. The Treasury has also today published the document Financial services in London: Global opportunities and challenges, which can be downloaded from the Budget 2006 website: http://www.hm-treasury.gov.uk/.

London – The Leading Financial Centre

London is the world’s leading international financial centre, and has great potential to be even more successful. We will work together to help ensure its further success, along with the rest of the UK based financial sector.

The growth of emerging economies, including China and India, presents new opportunities for London, which it is well placed to grasp. Increasing competition between London, other established financial centres and new growing centres, linked to the increasing internationalisation of financial markets and technological change, means that future success can never be taken for granted.

London starts from a strong position, with three key strengths:

its scale – the size of London’s markets – which creates genuine liquidity, the cornerstone of an efficient market. Smaller centres can supply neither the liquidity nor the vast pool of talented and innovative individuals in one place that London can;
its scope – London’s range of services, from investment banking to commodities to asset management to insurance markets to wealth management, plus its mix of financial and business services such as legal and accounting services, is unique;
its internationalism – no other financial centre can match the international nature of the UK’s financial markets. London is the leading centre for international bonds and share-trading – with, for example, 70 per cent of international bonds traded on its financial markets and over 40 per cent of global trade in foreign-listed equities. It has a strong tradition of openness to foreign ownership and participation – with, for example, more foreign banks than any other financial centre, and a reputation for fair and non discriminatory application of rules. Its openness extends to its culture too – which helps it attract the best personnel from all over the world. One quarter of its senior managers in financial and business services come from outside the UK. London is also able to boast a unique set of international linkages – the gateway between Europe and global markets, a strong transatlantic relationship, and historical links with emerging markets in Asia and Africa.

These strengths are based in turn on some critical advantages:

financial regulation – the UK’s proportionate regulatory regime for its wholesale financial markets is widely regarded as the best in the world. The previously fragmented regulatory framework has been streamlined into a single body, the Financial Services Authority. The FSA’s principles-based approach to regulation supports innovation. By making it easier for firms locating to London to trade elsewhere in the EU, European financial regulation helps to consolidate London’s position as a gateway to global markets;
business regulation and administration – the UK’s wider regulatory regime and its administration of tax and areas of business regulation is transparent and responsive, responding swiftly and flexibly to the development of new financial and market products and to the emergence of new business structures;
skills and immigration – London’s competitiveness as a financial centre relies on its continuing to attract highly skilled workers, from within the UK and internationally. Continuous raising of standards of education and training of the domestic labour force as well as openness to inward migration will remain key to its success;
time zone – London occupies a central location between the American and Asian time zones;
language – English is the language of international finance, giving London a healthy advantage – and London’s open culture also provides speakers of 300 other languages, including many working in the financial sector;
English law – the law of choice for international contracts. Six of the world’s ten largest international law firms headquartered in London and over 200 foreign law firms have established offices in London, providing essential services for the financial sector and its customers.

But we cannot be complacent about these strengths. We will all continually assess London’s comparative position. It is important that the business environment, including the regulatory framework, continues to respond to the changing requirements of rapidly evolving and competitive markets.

London’s success will also be important for the future of other financial clusters in the UK, such as Scotland and Leeds, with which it is closely connected and which in turn contribute to the attractiveness of London.

As part of our commitment to help achieve London’s future success, we will develop and support a coordinated strategy, to work together, recognising the opportunity that new emerging markets like China and India have to offer and the strength of international competition.

The fact that one of London’s strengths is the range of markets it has to offer makes it critical that the goal of ensuring its future success is shared across all of its markets:

listings, offerings and trading of securities, for companies large and small;
commercial, investment and corporate banking;
financial derivatives, and non-financial commodities;
insurance and reinsurance;
asset management and global private wealth management;
venture capital and private equity;
business services such as law, accountancy, IT and financial training.

We will work together to produce and publish a joined-up strategy – identifying priorities and actions. This strategy will be supported by a high-level group representing the key interests in London’s financial centre, involving:

all business sectors represented in London’s markets;
HM Treasury;
the Lord Mayor and the City of London Corporation;
the Mayor of London;
International Financial Services London.

The Bank of England and the Financial Services Authority will also participate in the high level group as observers.

UK Trade and Investment will take on a new role coordinating the executive delivery of this strategy.

Endorsed by:

Association of British Insurers
Association of Private Client Investment Managers and Stockbrokers
British Bankers Association
Canary Wharf Group
Euronext-LIFFE
Futures and Options Association
HM Treasury
Investment Management Association
Lloyd’s
London Investment Banking Association
London Metal Exchange
London Stock Exchange
Lord Mayor of London and the City of London Corporation
International Financial Services London
Mayor of London
UK Trade & Investment

Budget 2006 press notice index

Budget 2006 index

Press notice 04: Strengthening London’s position as the world’s leading international financial centre

Notes for editors

London – The Leading Financial Centre

Endorsed by:

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