The Z/Yen Global Financial Centres Index (GFCI), now on its 22nd edition, is a biannual publication providing detailed evaluation and analysis of competitiveness and rankings for the major financial centres around the world. The GFCI has been produced by London-based Z/Yen Partners in collaboration with Shenzhen’s China Development Institute (CDI) since the very first edition way back in March of 2007, with new editions published in March and September of each year. The index serves as a valuable reference for policy and investment decisions, and continues to receive considerable attention from the global financial community; a clear indicator of its reliability and perceived importance. As such, the analysis offered by the GFCI is granted considerable credence.

The most recent addition, published in September 2017 and known in short as GFCI 22, made for some truly interesting reading, presenting a financial landscape very different to what may have been expected had we posed the question a year ago, looking ahead into much uncertainty. Of course I refer here to Brexit; the landmark decision by the UK to leave the EU which has long been said will cause significant ramifications throughout various professional and economic industries.

The popular belief has been that the City of London, and in fact the UK as a whole, would suffer drastically as a result of the vote as multinational companies scrambled to find a new base outside of Britain, seeking instead to remain within the borders of the EU. While the Brexit vote has undoubtedly caused disruption, and we are likely still waiting for the true effects to present themselves, the outlook at this point is better than many predicted, at least according to the GFCI.

The index reports that London has not only maintained its position as the world’s leading financial centre, it has in fact extended its lead over New York City, which has long sat at number two. Furthermore the city’s overall rating, stated within the index as mark out of a possible 1000 and compiled using 102 instrumental factors, dropped by just two points; this constitutes the smallest decline of any of the top ten financial centres.

The gap between the top two centres of London and New York is now the widest it has been since the survey first began in 2007, a fact which the authors of the index attribute once again to growing uncertainty concerning trade. I won’t get into politics here, but President Trump’s election has thrown the future of many US trade deals into question, as evidenced by the country’s recent withdrawal from the planned trans-Pacific trade agreement.

New York is not the only American city to see a decline on the index as a result of the aforementioned uncertainty, as all centres in North America fell in the GFCI ratings this time around; San Francisco, Boston, and Chicago in particular each saw a rather large drop in their ratings.

The GFCI further states that while Western European financial centres remain rather volatile on the whole as business leaders attempt to ascertain those which will benefit most from the UK’s departure from the EU, many European centres are nonetheless closing the gap between themselves and the top performers. For example Frankfurt, home to the European Central Bank, has shot up to 11th in overall rankings from a position of 23rd just a year ago. Meanwhile, Dublin climbed from 33rd to 30th; likely a result of its recently increased appeal to many companies currently based within the UK.

While the report may seem like overwhelmingly good news for the City of London and its prospects, don’t get too comfortable yet. Uncertainty is the word of the day since the Brexit vote, and there is sure to be some significant shake-up among the top financial sectors as the true ramifications become increasingly clear.

TheCityUK, which represents London's financial sector, said the findings should not be greeted with complacency and appealed for additional information from the UK Government on its plans for a transition period after the country’s departure from the EU in 2019.

Chief executive of TheCityUK, Miles Celic, commented, “Absent this, many firms have already started to activate their contingency plans and others will undoubtedly follow suit if these aren't confirmed as soon as possible - and by the end of the year at the very latest.”

Sam Bonson

Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor as he continues to expand his horizons.
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