London still #1

Following my last post I now wish to nail my colours to the mast as  I am confident that London will sustain its position.

From a property perspective, the financial and banking sectors account for around 30% of all office take-up each year in central London (circa 2.75 million sq ft per annum).  As such one should not underestimate their importance to either London or UK Plc.

My belief in London’s continued dominance is a function of its many compelling advantages:

  • A deep pool of intellectual / human talent
  • 99% of the world’s business activity is located in time zones that overlap with London’s working day (more than any other city in the world)
  • English speaking
  • Heritage as global financial centre and reputation (which helps attract aspiring financial services job seekers)
  • A culture which is open to innovation
  • An attractive place for people to live
  • Well established and effective support systems and services including technology, media and professional services

The most important of these by far is the ‘people factor’.  When it comes to financial services talent London has the X factor – indeed, around 40% of London’s total employment is in business, financial and other services – making it an extremely attractive location for leading institutions. As well as highly skilled domicile staff, the capital attracts a good level of mobile international talent.

Given the importance of the ‘people factor’, the recent announcement of the reduction of income tax for top earners from 50p to 45p (from April 2013) is almost certainly good news. More good news from the budget was a larger than expected cut in corporation tax to 22p over the next three years – helping to signal Britain’s competitiveness to foreign investors and highlight an ‘open for business’ attitude.

With the ongoing popularity of the capital as a place to work, I believe the future of London as the global financial centre is assured: a point recently endorsed by research from the Z/Yen Group showing London to be number one, with New York and Hong Kong at two and three. Even better news is that the gap between these top three, which narrowed in 2010, is opening again.

To date the threat of increased regulation does not appear to be having much impact. Indeed, the world’s largest insurance broker, Aon, has recently announced it is to move its global headquarters from Chicago to London.  So it could well be that not only is London staying ahead of the pack but is in reality starting to once more pull away.