The City of London will remain attractive to investors because it proved resilient in the wake of the global financial crisis in 2008 and its environment will not change under the first British coalition government since World War II, according to Nick Anstee, lord mayor of the City of London.
Anstee, speaking in Tokyo recently, said the City’s competitiveness as a leading hub of international finance depends heavily on its pool of talented human resources, who create new markets and products.
Anstee, a key leader in Britain’s financial services industry, was speaking May 28 at a seminar organized by the Keizai Koho Center. He was visiting with a group of British financial representatives.
After two consecutive quarters of expansion in gross domestic product, the U.K. economy is “definitely out of the recession” and its financial services sector is continuing to make a substantial contribution to growth, Anstee said.
One of the biggest reasons the City has proved resilient in the face of the crisis, Anstee said, is the openness of its markets.
“We have no barriers to foreign ownership or investment. Some 28 percent of the City is owned by Japanese, German, U.S. and Irish investors,” he said, adding that several sovereign wealth funds — including those from Kuwait, Abu Dhabi, Brunei and Singapore — have a substantial presence there. There are also some 280 foreign-owned banks in Britain, more than in Paris, Frankfurt and New York combined, he noted.
Other key factors contributing to the U.K.’s leading position in the industry are people and skills, he said.
“We work hard to attract top people from around the world — several thousands of these talented people are Japanese nationals. Even in the aftermath of recession, there are more than 1 million people employed in financial services,” Anstee said.
“The success of the City of London is based on its ability to create new markets and products (such as) Islamic finance and carbon emissions trading — and these products, services and markets spring from the innovative minds of skilled workers” who have come to Britain from around the world, he said, adding that the U.K. is rated by the World Bank as having “one of the most flexible labor markets in Europe.”
Another factor in the City’s competitiveness, Anstee said, is “our consistent, politically neutral legal system based on English common law.” Britain’s approaches to taxation and regulation contribute to the ease of setting up and running businesses there, he added.
“All of this taken together means that when the financial crisis hit, we were in a stronger position to recover and retain our competitiveness than many other countries,” Anstee said.
After all the upheavals of Britain’s general election in May, the financial services industry in London “has to work cooperatively” with the new Labour-Liberal Democrat coalition government of Prime Minister David Cameron, which ousted Labour from power for the first time in 13 years.
Success of the U.K.’s agenda of pursuing growth while paying off the soaring public debt “depends on the government and the City working together,” Anstee said. “The new government is determined to tackle U.K.’s deficit (through public spending cuts) sooner than later . . . There may be disquiet, dismay and real anger, but it has to be done unless the U.K. wants to go the same way as Greece, Spain and Portugal.”
“In the recession, we learned a great deal about the effectiveness of regulation and corporate governance” in the British financial services industry and “we are now learning new lessons about how to govern ourselves as a nation under the coalition government,” he said. “I can assure you that the new Chancellor would have no intention of altering the effectiveness of our regulatory regime, which is generally held to be fair.”