(Bloomberg) — London’s role in the global financial system will be eroded further without changes to taxes, visas and international investment, according to one of the City’s main lobbying groups.
TheCityUK said there were already signs that British financiers were losing ground to other hubs, particularly in Asia. It said the country’s global share of cross-border bank lending fell from 17.8% in 2010 to 15.2% last year, while the share of hedge fund assets fell from 20.7% in 2010 to 14% in 2019.
“Europe is littered with cities that were once the leading international center of their day,” said Miles Celic, chief executive officer of TheCityUK. “The last decade has been one of growth for our industry, yet global competitors have grown faster.”
A new report from the lobby group highlighted areas where London could build an advantage such as financial technology, data, risk management and environmental, social and governance issues. Ensuring the U.K. finance sector can grow in these areas would require making high-skilled worker visas easier to obtain, lowering tax bills for banks and fund managers, as well as investing more in the legal system.
TheCityUK also called for more deals with international regulators, calling cross-border recognition “the quickest way to boost financial and related professional services trade.” The U.K.’s post-Brexit trade deal with the European Union left out the industry and talks on equivalence have made little progress.
British authorities have made some efforts since Brexit to improve the global standing of the financial services industry, which generates almost 7% of U.K. economic output. Chancellor of the Exchequer Rishi Sunak said in July that “we now have the freedom to do things differently” and could deepen ties with emerging markets. Regulators are also overhauling the listing rules to make it easier for companies to join the London stock markets.
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