Post-Brexit City booming on rocket boosters

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Eat your heart out you doubters: not only has the City of London survived Brexit more or less intact but, according to three reports out over the last week, it is firing on rocket boosters.

The first survey from EY reports that nearly 90pc of major financial services firms said they will either seek to open up in Britain or boost their current operations. EY also found that investor confidence in the UK financial services sector is at an all-time high following the lifting of pandemic restrictions and that so many of the fears over a Brexit exodus have simply not happened.

As Anna Anthony, head of financial services at EY, put it: “This is testament to the stability and resilience of the mature UK market which continues to ably withstand the material challenges and uncertainty of both the pandemic and Brexit.”

What’s more, Anthony  added that although confidence levels have fluctuated over the last few years, this latest investor sentiment survey shows that amid economic downturn and recovery, investors are now  reassured by the maturity and stability of the UK market.”

One of the big factors driving this positive investor sentiment is the way that the UK has been one of the first countries in Europe to relax pandemic restrictions: half of the firms surveyed said a country’s success in handling Covid-19 had become the most important consideration in their decision to invest.

In a second paper, entitled The Global City by the City of London Corporation, London held the top spot for financial and professional services in terms of overall offer when compared to other global destinations, including New York, Singapore, Hong Kong, Paris and Frankfurt.

It’s the City corporation’s second annual study of what the UK has to offer business. It looked at 95 different metrics for the survey, including green financial initiatives. On a competitiveness measure, London received an overall score of 61, followed by New York (58) and Singapore (53).  Lower down came Frankfurt (45), Hong Kong (39) and Tokyo (36). The research included Paris for the first time as a second European comparator centre, with a competitiveness score of 41.

The list of how well the City is doing is almost embarrassing and you can see why Europe’s capitals are fighting so hard to catch more of our business. On just about every measure, the City comes out top from an innovative ecosystem to its financial services regulatory regime remains the most favourable in the world.

As the corporation’s research points out, the UK financial services exports increased and the UK’s trade surplus remains higher than in all other global financial centres despite the toughest of years.

It’s not doing too badly on tech either, being home to more than a quarter of Europe’s unicorns while London increased its share of headquarters of Fortune Global 500 firms by more than a third.

Just to confirm it’s success, the City and the UK remain Europe’s leading destination for investment in financial services, the world’s leading foreign exchange trading centre, Europe’s leading centre for asset management and biggest centre for issuance and trading of international bonds.

Of course, all such surveys and reports are qualitative as they depend on the metrics chosen. But it was refreshing to see this latest research from the Corporation as many of its policymakers – along with most of the big US banks – were some of the most violently opposed to Brexit, fuelling fears that up to 250,000 jobs would be lost and that firms would pack up their bags and head to the continent.

How wrong could they be. As far as one can tell, the City – despite Brexit – is doing exceptionally well, even to the extent that the EU has caved in on one of the most controversial of all financial activities – clearing – by extending access for EU firms to the City’s clearing houses.

Yet even our great, global City isn’t perfect by a long chalk. There is much to be done to improve competitiveness, from raising skills to upgrading our digital and transport infrastructures. Most pertinently, this high-spending government needs to ensure that tax rates are kept fair and competitive as the total tax paid by UK based financial services firms in tax and contributions is relatively high compared to other centres.

Where the UK must do far more though is pushing up skills in the City’s workforce but also in the wider population. One of the more disappointing outcomes of the corporation’s research was that it found the UK was in the bottom half of the skills results. Surprisingly, it came out ahead of Germany, France and the US but below Singapore, Hong Kong and Japan.

There is one sector where UK brains do excel, and that’s in life sciences and biotech. The third report of the week comes from the BioIndustry Association which showed that Britain’s success in developing Covid-19 vaccines and mutation-tracking kits attracted even more foreign backers to the UK last year, taking investment in the country’s biotechs to record-breaking highs: over the last year, the BIA reports that biotech and life sciences companies attracted £4.5bn in public and private fundraisings in 2021 – a 60pc rise on the previous year.

Industry chiefs are hailing Britain’s response to the pandemic – and success in developing vaccines and other Covid-19 treatments. Potentially this ushers in what some are calling a golden age in the biotech to life sciences sector. If only Westminster could get its act together, there is much to be celebrated and built upon despite the horrors of the last few years.