06 Feb 2020
There's no shortage of knowledge and expertise at RSMR! Each week we get our heads together and talk about events in the world and how investments are affected by them. Our broadcast tackles a wide range of topical issues facing investors from liquidity to the future of alternatives to politics and the pound. We like to think of it as cracking content for the financial adviser. Have a read & get clued up...
London as a financial global city leads the world in currency and commodities trading, insurance and shipbroking and is the second largest investment management centre globally after the US. In the UK we manage £9.1 trillion of assets, second to the US, who have a much larger economy. We manage more assets than France, Germany & Switzerland combined. Almost two-fifths of the assets managed here in the UK are for international clients, contributing to export earnings, tax revenue and helping to support 115,000 jobs across the sector.
London has enjoyed a good run in the last decade with UK assets more than doubling since the financial crisis but Brexit is a cloud currently hanging over the great city and questions have been raised about whether London can keep its position at the heart of the international monetary system.
Consultancy firm EY said that assets worth nearly £800 billion were being moved from Britain to other European financial centres in the run up to the exit date and Brexit threatens the city’s access to foreign talent, which it has relied on for centuries. In 2017, 18% of the workforce in the city was born in Europe, versus 7% for the whole country. There’s competition too with Dublin, Luxembourg, Frankfurt, Paris and Amsterdam all vying for London’s position in Europe.
Our position in the world is clearly significant but as we leave the European Union, can the UK & London hold onto its throne?
What factors put us up there? London business hours span many time zones. Asia is still trading when London opens for business in the morning, London shares much of the day with Europe and it’s still open when New York begins trading. With almost 40% of its clients being international, London is a true global centre, managing money across the globe.
What other factors put the UK at the top of the table? Many of the financial institutions use British common law as the basis of their construction and our language is a significant factor. The UK also has a long history of global innovation in terms of financial markets and as the world becomes more complex, we have an accommodative and supportive regulatory backdrop, encouraging innovation on a technical level in terms of financial technology and product development. We also have a wide range of highly qualified and experienced people across different financial sectors and many of these skills can easily be transferred to the investment management industry.
The ominous warnings during the 2016 referendum that London would lose its financial throne if we left the EU have so far been proven wrong. The Bank of England estimates that around 4,000 people may now have moved but the key decisions are still taken in London.
Financial capitals such as London are said to have remarkable longevity and their rise and fall typically happens at a glacial pace. Continued innovation and a broad outlook will no doubt see London maintain its position as the world’s banker for some time to come.
Looking for a whole host of informative, up-to-the-minute content from the fund rating experts? Click here to head to RSMR Connected.
This information is for UK Professional Advisers only and should not be given to retail clients.The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
Rayner Spencer Mills Research Limited is a limited company registered in England and Wales under Company Registration Number 5227656. Registered office: Number 20, Ryefield Business Park, Belton Road, Silsden, BD20 0EE. RSMR is a registered trademark.