Fintech helps London top global FDI chart
London's financial and professional services attracted more foreign direct investment (FDI) last year than any other city in the world, according to a new report.
27 April 2022Projects in the City with foreign backing numbered 114 in 2021, ahead of the 104 deals Dubai recorded, 103 in Singapore, New York's 54 and 51 in Paris.
The report from the City of London Corporation also found that the UK-wide total of £1.1 billion in 186 investments was second only to the 234 in the US in a table of countries attracting the most FDI projects.
A third of all the UK projects were focused on fintech, while a tenth were in banking space with a similar proportion going to private equity or venture capital projects.
Last month, two surveys - EY’s Brexit tracker and Schroders’ Global City Index - showed London had retained its top spot among global hubs and that the pace of job relocations out of the City had continued to wane.
The latest report found that, between 2017-21, the UK attracted FDI from 64 countries, with the US being the largest investor in the nation's financial and professional services, followed by Switzerland and Australia.
Catherine McGuinness, policy chair at the City of London Corporation, said: “It comes as no surprise that London continues to lead the world as the top destination for investment in financial and professional services. Our fundamentals remain strong and the UK’s continuing appeal to investors is demonstrated by a robust pipeline of projects both in the capital and other regions.
“It is vital that we continue to build on this success. We must future-proof the sector and make sure we remain globally competitive as we forge a new chapter in our trading history.”
A report on the Fortune website said the increase in investment was helped by a number of new listing-friendly rules introduced over 2021 "that have helped to rebrand London as the hottest tech listing hub of Europe".
"The UK’s offer to global investors continues to go from strength to strength due to its unique combination of time zone, language, legal system, global talent and financial services ecosystem," he said.
“Our position at the crossroads of Europe’s biggest financial and tech sectors make us one of the globe’s foremost hubs for innovation.”
Meanwhile, John Glen, the UK's financial services minister, predicted on Tuesday that the European Union would find it hard to replace London for clearing trillions of euros in derivatives.
Speaking to the House of Lords European Affairs Committee, Mr Glen pointed out that Brussels was allowing EU banks to use London for clearing until June 2025. In the interim, the EU Commission was looking at regulatory moves to get banks to shift more activity to Frankfurt.
"It's quite challenging to build up that infrastructure, but that is a matter for them," he said, adding that, so far, small amounts of clearing had moved from London, but not enough to concern Britain. "I don't think it's part of a trend," Mr Glen said.
The minister also pointed out that, since Brexit, some 7,000 financial services jobs had relocated from London to the EU - far below the numbers many had predicted would go.
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The report from the City of London Corporation also found that the UK-wide total of £1.1 billion in 186 investments was second only to the 234 in the US in a table of countries attracting the most FDI projects.
A third of all the UK projects were focused on fintech, while a tenth were in banking space with a similar proportion going to private equity or venture capital projects.
Brexit has yet to impact the UK's foreign direct investment
The Financial News website commented on Wednesday that the findings in the report "add to a growing weight of research suggesting the capital has indeed managed to retain much of its financial services prowess in the wake of Brexit".Last month, two surveys - EY’s Brexit tracker and Schroders’ Global City Index - showed London had retained its top spot among global hubs and that the pace of job relocations out of the City had continued to wane.
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The latest report found that, between 2017-21, the UK attracted FDI from 64 countries, with the US being the largest investor in the nation's financial and professional services, followed by Switzerland and Australia.
Catherine McGuinness, policy chair at the City of London Corporation, said: “It comes as no surprise that London continues to lead the world as the top destination for investment in financial and professional services. Our fundamentals remain strong and the UK’s continuing appeal to investors is demonstrated by a robust pipeline of projects both in the capital and other regions.
“It is vital that we continue to build on this success. We must future-proof the sector and make sure we remain globally competitive as we forge a new chapter in our trading history.”
A report on the Fortune website said the increase in investment was helped by a number of new listing-friendly rules introduced over 2021 "that have helped to rebrand London as the hottest tech listing hub of Europe".
UK is still standing even after pandemic
Vincent Keaveny, Lord Mayor of the City of London, said that despite the challenges posed by the pandemic, the UK’s financial and professional services sector had proven resilient."The UK’s offer to global investors continues to go from strength to strength due to its unique combination of time zone, language, legal system, global talent and financial services ecosystem," he said.
“Our position at the crossroads of Europe’s biggest financial and tech sectors make us one of the globe’s foremost hubs for innovation.”
Meanwhile, John Glen, the UK's financial services minister, predicted on Tuesday that the European Union would find it hard to replace London for clearing trillions of euros in derivatives.
Speaking to the House of Lords European Affairs Committee, Mr Glen pointed out that Brussels was allowing EU banks to use London for clearing until June 2025. In the interim, the EU Commission was looking at regulatory moves to get banks to shift more activity to Frankfurt.
"It's quite challenging to build up that infrastructure, but that is a matter for them," he said, adding that, so far, small amounts of clearing had moved from London, but not enough to concern Britain. "I don't think it's part of a trend," Mr Glen said.
The minister also pointed out that, since Brexit, some 7,000 financial services jobs had relocated from London to the EU - far below the numbers many had predicted would go.
Read more news and views from David Sapsted in the Spring 2022 issue of Think Global People.
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