London Vs New York: Which is the world’s financial capital?

London Vs New York: Which is the world’s financial capital?

A very much debated topic and a matter of pride for both cities, but which is the financial capital of the world? Does that grand title go to London or New York?

Well, naturally at KennedyPearce we are biased to our own fair city London and a recent post on Business Insider by Finance Writer Mike Bird supports this; that London is in fact the world’s financial capital despite New York overtaking London in The influential Global Financial Centres Index in May this year.

But what is it that makes London a true contender? KennedyPearce focuses on the following four points:

1) Stock Exchange
In terms of stock exchange, London definitely loses. The London Stock Exchange isn’t even the second-largest stock exchange in the world after the New York Stock Exchange. It’s the fourth (after the Nasdaq and Tokyo).

But then again, we must remember that the volume of equities trading done on the London Stock Exchange doesn’t capture at all equities trading done in any one place — just the ones local to that economy. So of course London’s stock exchange is smaller than New York’s because the the UK’s economy is much smaller than that of the US. But we’re comparing the cities here, not the countries.

So instead we need to look at a more international measure of finance. Business Insider decided to look at currency markets. They found that in terms of foreign exchange market turnover, the UK isn’t just the leader, it’s still gaining ground, according to the Bank of International Settlements. In 1998, 32.6% of the world’s forex trading was done in the UK (almost all of which takes place in London), against 18.3% in the US. By 2013, the UK had grown to make up 40.9% of the global market.

2) Everyone wants to work in London
This year the Boston Consulting Group polled more than 200,000 people in 189 countries, asking them which city they would move to for work. In top three positions were London, New York and Paris, with London leading with a 16% compared to New York’s 12.2%.

The general consensus of the poll is supported by the numbers of people moving to the UK from the rest of Europe which has increased significantly. In 2007-2008, 15,400 Italians registered to work in the UK, a figure that was up to 44,110 by 2013. Europe’s young workforce is increasingly migrating to the UK (where its workers don’t need visas to live and work), and a huge number seek out London!

3) Everyone wants to live in London

The cost of buying and renting in London is something that makes Londoners want to weep! But the truth is it’s all down to a side effect of the city’s incredible success!

In 2012-2013, 49% of buyers in London’s prime central market were not British, illustrating the huge demand from abroad. And they’re not just buying to hold property as an investment: Only 28% of buyers live outside the UK, showing that a huge number of international buyers want to live in the city.

4) An optimistic future
In an article published by the Financial Times, Xavier Rolet, chief executive of the London Stock Exchange Group, insists that overall the City of London is clearly the world’s leading international financial centre. And the recent spurt in the UK’s economic fortunes have given it another boost.

Xavier Rolet:xavier rolet “In the last two years, the regulatory and fiscal measures introduced by the UK government to

recalibrate [small business] funding around risk and equity capital have nurtured a tech revolution which has helped fuel an impressive economic and jobs recovery,” says Mr Rolet, pictured. “Ensuring that these minnows succeed on the path from ‘start-up to stardom’ is one of LSE’s priorities.”

So what do you think? Is London worthy of the role of the world’s financial capital? Tweet us your responses at @KennedyPearce

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