- Over half of financial services leaders say that negativity about the City’s health is being overplayed.
- Six in ten plan to invest more in their London operations over the next five years compared to the rest of their UK operations. They are investing on average 22% of total revenues this financial year, rising to an average of 30% of total revenues over the next five years.
- Leaders will focus increased investment on building networks among key trade bodies and partners, growing specific parts of their London operations and upskilling their London workforce.
More than half (53%) of the UK’s financial services bosses believe that negativity about the health of London as a financial centre is being overplayed, as the majority (62%) plan to increase investment in their London operations over the next five years, according to KPMG’s latest UK Financial Services Sentiment Survey.
This comes as the London Stock Exchange has started showing signs of improvement this year, with two companies listing on the main exchange and five new entrants have joined the AIM, the UK’s junior stock exchange.
The survey found that of those increasing investment in their London operations this financial year, nearly a fifth will invest more than 40% of total revenues, rising to almost half of leaders investing the same in five years’ time. Six in ten say investment will be focused on building their London network via new relationships with trade bodies, organisations and partners, followed by more than half (56%) planning to invest more in growing parts of their London operations. 49% will focus on upskilling their City workforce and more than a third will grow their physical footprint in the City.
Karim Haji, global and UK head of financial services at KPMG, commented: “The City is at the heart of financial and professional services, creating more than 2.4 million jobs and contributing almost £110 billion in taxes. The fact that industry leaders are planning to invest substantially more in the City underscores its significance as an engine of capital allocation and future economic growth.
"We need to celebrate the City, not talk it down, particularly when the current state of geopolitics is threatening a path towards economic stability.”
London still the leading financial hub in Europe
Most leaders (59%) believe that negativity about the City’s poor health is because there is too much emphasis being placed on the performance of the London Stock Exchange versus London as a financial centre more broadly.
More than two thirds (68%) of leaders ranked London as the leading financial centre in Europe, followed by just eight percent ranking Zurich as the top spot and six percent ranking Frankfurt.
When thinking about how London compares to other global financial hubs, such as New York and Singapore, FS leaders rank talent and skills, global reach and a strong regulatory environment as its strongest assets. Having a resilient business infrastructure was ranked by the least number of leaders (35%) as something London excels at versus its peers.
But leaders recognise that there are opportunities to enhance the attractiveness of the City and stimulate growth. Over half (54%) feel that attracting more private capital back into the UK is most urgently needed to boost the City. This is followed by better tax incentives and attracting talent and skills back into the UK (45%). Regulatory reform and initiatives to boost listings were regarded by the least number of leaders as what is most urgently needed to drive growth (30 and 33% respectively).
Karim concluded: “The City is so much more than the Square Mile. It plays a central role in supporting businesses across the whole country, so must be front and centre of policy makers priorities in driving economic growth.”
