The British capital has lost significant ground in the first published Global Financial Centers Index since the United Kingdom ended its exit from the European Union, barely managing to maintain its second place in the ranking.
The London rating has dropped 23 points since the previous edition compiled by the think tank Z / Yen, which launched in September. London is now just one point ahead of Shanghai, and Hong Kong and Singapore are not far behind.
The ranking is produced by combining assessments by financial professionals with quantitative benchmarks provided by third parties, including the World Bank, the Organization for Economic Cooperation and Development and the United Nations.
Billions of dollars in stock and derivative trades have disappeared from London since Brexit ended on January 1, moving to cities like Amsterdam, Paris and Frankfurt, the seat of the European Central Bank.
Frankfurt’s rating rose 12 points in the latest Z / Yen index, while Milan rose 28 points. Paris and Amsterdam saw their assessments weaken.
The threat of more lost business looms over London, home to dozens of the world’s largest banks, hedge funds and insurance companies.
Financial services were not included in the UK-EU trade agreement agreed by British Prime Minister Boris Johnson in December, putting Brussels in a position to decide how much access UK-based companies will have to the vast EU market.
“I am not predicting the end of London as a major financial center, but I think it is in the most precarious state it has been in for a long time and I cannot be complacent,” Alasdair Haynes, CEO of Aquis Exchange, a budding rival to the Stock Exchange London and CBOE, he told CNN Business in February.
London is still an attraction for talent. And many financial institutions hope to bring people back to the office as soon as possible.