New York has overtaken London as the world’s most attractive financial center, a survey said on Wednesday, as Britain’s decision to leave the European Union prompts banks to shift jobs out of the city to preserve access to Europe’s single market.
Brexit poses the biggest challenge to the City of London’s finance industry since the 2007-2009 financial crisis, since it might mean banks and insurers lose access to the EU, the world’s biggest trading bloc.
New York took first place, followed by London, Hong Kong and Singapore in the Z/Yen global financial centers index, which ranks 100 financial centers on factors such as infrastructure and access to quality staff.
London Drops as Brexit Looms
London’s ranking fell by eight points from six months ago, the biggest decline among the top contenders. The survey’s authors said the drop reflected the uncertainty around Brexit.
“We are getting closer and closer to exit day and we still don’t know whether London will be able to trade with all the other European financial centers,” Mark Yeandle, the co-creator of the index, told Reuters.
“The fear of losing business to other centers is driving the slight decline and people are concerned about London’s competitiveness.”
Since Britain voted more than two years ago to leave the EU, some of the world’s most powerful finance companies in London have begun moving staff to the EU to preserve the existing cross-border flow of trading after 2019.
Jobs Exodus from ‘The City’?
Around 5,000 roles are expected to be shifted or created in the EU from London by March next year, the date of Britain’s EU exit, a study by Reuters published in March found.
The head of the City of London financial district predicted in July that 3,500 to 12,000 financial jobs would go because of Brexit.
The past year has seen a pick-up in the number of banks saying they plan to set up new EU subsidiaries after Brexit. Most major U.S., British and Japanese banks said they would build up operations in Frankfurt, Paris or Dublin.
Other European centers moved in the global rankings. Zurich rose to ninth place from 16th place six months ago. Frankfurt rose to 10th from 20th place and Amsterdam climbed to 35th place from 50th place.
“London and New York have long vied for the top spot of this index and the uncertainty around the future shape of Brexit is likely to be factor in their latest switch in positions,” said Miles Celic, chief executive of the lobbying group TheCityUK. “In a competitive world we cannot afford complacency.”