World Beater?: The City faces a global challenge

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The Independent Online
By the end of the century only one city will become the centre of global finance. London has a remarkable opportunity to be that city - provided it makes no mistakes. Londoners are prone to complain, but they miss two essential points. The first is that 90 per cent of complaints about the capital concern transport, and these are capable of easy resolution, given a government commitment to invest the required monies to upgrade the rail infrastructure, in particular.

Second, other cities are much worse off. Last week it was reported that one-third of the office buildings in Wall Street are empty and New York is losing its leadership within the US to other outlying locations. Crime, lack of commuting facilities and high taxes are given as reasons for this trend. Tokyo, by contrast, has little crime, excellent rail connections (although appalling traffic) and high property prices, but suffers from a lack of openness in the regulation of its financial It seems reluctant to assume a global role in international finance.

Just look at the benefits that London can offer in comparison with its two main rivals. Heathrow is the busiest international airport in the world. Telecom's provisions are the best and cheapest available. The City now has four fibre optic networks available or under construction, giving the most reliable service for fast communication.

The main markets in the City benefit from these remarkable advantages and go from strength to strength. A typical businessman visiting London can see half-a-dozen key players in the course of a day, whereas in any other centre he might have to spend a week tracking them down.

Our main financial markets benefit from an open and supportive regulatory structure which, although sometimes costly, is still sensitive to market sentiment and is paid for and operated by practitioners who know the business. Support from professional firms is unequalled anywhere in the world (try to get a prospectus printed overnight in Frankfurt) and the tax system is regularly updated to respond to market changes.

As a result of all these factors, the main markets are thriving as never before. Recent unofficial estimates suggest that London now accounts for two-fifths of the world turnover in foreign exchange, and the futures market, in the shape of LIFFE, has nearly doubled its turnover in the past year.

Customers move where markets have the greatest depth and liquidity and in a year of great turbulence the City of London has proved to be a match for overseas competition. Even the renowned Bundesbank is rumoured to trade more foreign currency through London than it does through Frankfurt. Provided we build on these advantages and do not allow too much over-regulation to pour out from Brussels we have a real prospect of drawing in an increased share of world financial business bringing new wealth to the UK to rival the value of North Sea oil (remember that?).

Apart from a supportive role to enable the Financial City to achieve that goal, the Cor-poration of London as local authority under the leadership of the Lord Mayor has an important but difficult task - to make the rest of the country realise just how much people outside the City benefit from its success.

In a strange way, as a nation we prefer to denigrate rather than praise our capital city, perhaps not recognising the foreign exchange, tourism and financial services income which it generates.

The City of London alone contributes more than pounds 600m a year in business rates to the rest of the country and London as a whole is reckoned to have generated pounds 10bn more in revenue than it took back in government grant last year.

No surprise, therefore, to find that the wealth-creators in the biggest growth industry this country possesses occasionally feel isolated from mainstream opinion, friendless in government and without a platform to set about the selling of the City and its services to the rest of the UK.

Any volunteers?

Michael Cassidy is chairman of the policy and resources committee of the Corporation of London.

(Photograph omitted)

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