London 2013

This year has been far from dull. London in 2012 has been marked by historical triumphs and dramatic scandals. The London Olympics gave Britons a jubilant counterpoint of national pride and belonging to the low of the riots of 2011. Sadly, the afterglow of the Olympics is quickly fading in the light of the banking and media scandals of the last few months. The 2008 financial crisis opened a can of worms that revealed a seemingly endless stream of corporate decadence.  However, how are the reactionary responses from the public and government affecting business? The sins of our predecessors and the shortfalls of the ‘old boys’ should be acknowledged and learnt from, but there is the fine line between preventing bad behaviour and discouraging economic recovery. According to City of London figures, the level of employment in the City of London grew about 0.8% this year, almost 6% less than in it did in 2010. The number of people employed in the financial sector fell 11% this year to below 250,000 people – mostly resulting from lower profitability in the financial sector. There is currently a global trend of low levels of trading in equities and currencies, and depressed levels of mergers and acquisitions. The question is - are we losing our competitive edge and does it really matter? According to the CEBR, London will lose its place as the world’s financial centre by 2015 to Hong Kong - with Singapore quickly catching up. After city jobs were aggressively cut after 2007, New York took over London as the city with the largest number of ‘city type’ jobs in 2011. TheCityUK recently published a report ‘recommending that the Government sets out an emphatic vision for the future success of financial and related professional services in the UK.’ ‘Driving Competitiveness: how to secure the UK’s position as the location of choice for financial and related professional services’ argues that ‘while fears of an ‘exodus ‘from the UK have proved unfounded to date and the UK retains many strengths, on balance over the last six years financial services firms have found the UK less attractive than some rival locations.’ It notes that the relocation of headquarters is likely to be prompted by ‘compensation inflexibility (e.g. a bonus cap), the imposition of taxes driven by where business is booked, regulatory uncertainty or deteriorating sentiment towards the financial services industry and professionals’. In 2011, financial and insurance services contribute £125.4 billion to the UK economy with London accounting for almost half. It employs 3.6% of the UK’s job market and £21 billion in tax receipts. We do need banks, or rather; we need institutions that do what banks do. With banks already cutting out the middle men with mass redundancies and thier bonuses shrinking with lower profit margins, the time for criticism and blame is long gone. Now is the time for innovation and for a rejuvenation of the City of London.