London Losing Its Crown in Battle of Financial Hubs
Staff Writer, CNBC.com
London is losing its crown in the battle of the global financial hot spots, with New York expected to overtake it this year as the biggest financial-services employer and Hong Kong and Singapore snapping at its heels.
Hong Kong will overtake London by 2015 if current trends in job cuts and moving business to the East continue, according to a new report by UK-based Centre for Economics and Business Research (CEBR).
Singapore's emergence as a financial center is also changing the focus away from London, which has had the most city-type jobs since the turn of the twenty-first century.
The strength of the city was driven by London's geographic position between the West and the East, historical strength in banking, a well-educated workforce and government focus on enabling financial services to grow.
Since the credit crisis, UK-based financial services companies have faced regulatory crackdowns and protests against their conduct before and during the crisis. The euro zone debt crisis has also hit revenues.
Many employees, already facing job cuts, have had to bid farewell to the hefty bonuses of previous years. City bonuses in 2011 were an average of 6,749 pounds ($10,728), their lowest level since 2004 last year, according to CEBR. This year's bonus season is likely to be even worse after a 20-percent decline in equity trading and a fall in revenues from mergers and acquisitions as companies conserve their cash. The CEBR slashed its forecast for the total bonus pool from 2.3 billion pounds to 1.6 billion pounds.
Douglas McWilliams, chief executive of CEBR, said: "Much of this shift is inevitable as a result of the world's changing economic geography. And Hong Kong will be boosted by the internationalization of the renminbi. But we have accelerated the shift through short-sighted overregulation, penal taxation and banker bashing."
Written by Catherine Boyle, CNBC. Twitter: @cboylecnbc.