Whatever challenges Britain faces as an international financial centre, it is hard to accuse the government of being bashful about promoting it.
The initiatives have come from the top down. George Osborne, the chancellor, recently announced plans for Britain to become the first non-Muslim country to issue an Islamic bond, or sukuk. He said his goal was for the City of London “to be the unrivalled centre for Islamic finance”.
Meanwhile, Britain is easing regulatory requirements to allow Chinese institutions to set up wholesale banking branches rather than having to establish separate subsidiaries. In a parallel move, the government is promoting London as an overseas centre for trading in renminbi.
Nor is the drive to promote Britain as a financial centre confined to the government. In a recent speech, the governor of the Bank of England, Mark Carney, evoked an image of the UK at the centre of a renewed globalisation. His emphasis was on the Bank facilitating this role by ensuring that financial institutions remain resilient.
Despite such pronouncements, the UK faces several challenges if it wants to remain a leading centre for global finance. On a macroeconomic level there is concern that it is perpetuating a lopsided economy that is too heavily dependent on finance.
A related worry is that the beneficiaries of investment in financial services could be too concentrated in London and the investment banking sector. The City, if defined most broadly as the whole financial services sector, employs about 1m people, of whom about two-thirds work outside London. Throw in professional services – such as accounting practices, law firms and property professionals – and almost another 1m could be added.
Finally, there is increasing competition from other financial centres, especially those in Asia.
While London is generally maintaining a slight lead over New York, according to a recent report by City think-tank Z/Yen, Hong Kong and Singapore are both gaining ground on the established leaders. For Chris Cummings, the chief executive of TheCityUK, a financial services industry body, this is “absolutely a concern”.
Martin Gilbert, the chief executive of Aberdeen Asset Management, is in pole position to witness some of these trends first hand. His company is based in Aberdeen and has an extensive operation in Asia, including a regional headquarters in Singapore. Mr Gilbert has also joined the government’s Financial Services, Trade and Investment Board, tasked with promoting UK financial services.
He specifically defines himself as bringing a “Scottish view” to the challenges facing UK financial services. “There are vast numbers of people in financial services employed outside the M25 [London orbital motorway]”, he says. “Especially in places like Glasgow and Edinburgh.”
Mark Gregory, chief economist for the UK and Ireland at EY, accepts that inward investment is flowing into existing locations but says it is not going to new ones. “Where there is a historic relationship – Yorkshire, Scotland are probably good examples – there is some definite spillover there,” he says.
Sue Langley, the chief executive of the Financial Services Investment Organisation, is pursuing four priorities for investment in financial services: asset management, insurance, financial technology and mid- and back-office functions.
As for international competition, the most formidable threat is seen as coming from Asia.
“Places like Singapore and Dubai are really very keen to woo people to have their financial centres there as well,” says Mr Gilbert.
EY’s Mr Gregory adds that while Asian centres have the potential to grow stronger, the recent turbulence in emerging economies has, at least in the short term, worked to London’s advantage. “Asia probably is the new threat, but London seems to have advantages that are holding up.”