City helps Britain develop into the undisputed financial center of Europe

Monday May 20, 2024 6:00 am

Despite the impact of Brexit, Britain has increased its leading position as Europe’s top destination for investment in financial services, according to new research from EY.

Britain has increased its leading position as Europe’s top destination for financial services investment, despite the impact of Brexit, according to new research from EY.

Britain attracted 108 financial services projects last year, up from 76 in 2022 and well ahead of European rivals. France, in second place, secured only 39 foreign direct investment (FDI) projects in 2023.

This means that Britain is now home to a third of all European FDI projects focused on financial services, up from 26 percent in 2022. France and Germany are joint second with 12 percent each.

“The UK not only maintained but also significantly expanded its leading position as the most attractive European market for financial services last year,” said Anna Anthony, managing partner of EY UK Financial Services.

“Even amid challenging macroeconomic conditions and geopolitical uncertainty, the stability of the UK financial services sector has ensured that foreign investor confidence remains strong.”

The US remained the largest source of investment in European financial services, accounting for 28 percent of all FDI projects. This was the highest percentage of US-backed projects in the past decade.

London attracted the largest share of foreign investment, securing 81 projects in 2023. This was a huge increase of 76 percent on last year and more than double the Paris level.

The figures show that London remains Europe’s most important financial center, despite fears that Brexit would dethrone the country.

However, the city is likely to face a stiff challenge from Paris in the coming years. Investors rank Paris above London as the most attractive European city for financial investment over a three-year period.

“The competition is fierce,” says Anthony. “Increasing the attractiveness of the market must be a top priority for both business and government.”

Maintaining the city’s international competitive position has been an important government goal.

In late 2022, the government launched the Edinburgh reforms with the aim of revitalizing London as a financial centre. A raft of consultations have also been launched across different parts of Britain’s financial infrastructure.

One of the most important measures was the introduction of a new secondary mandate for financial regulators to take international competitiveness into account when making regulatory decisions.

Investment Secretary Lord Johnson said: “The UK is at the heart of financial services investment across Europe and this is an unprecedented vote of confidence in our exalted position.”

“With strong investor confidence to match these brilliant results, I am pleased that we are now unquestionably a financial services superpower,” Johnson continued.

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