Based on a report “Global investment: driving UK jobs and growth in financial services” compiled the City of London, the city received the most financial investment from other countries compared to its counterparts in other countries. The financial services that were based in the city got more foreign direct investment (FDI) than the other major financial hubs in the world.
The report shows that in 2017, a total of 55 FDI projects were secured by the City of London. This was twice as many projects secured by both Frankfurt and New York, which are London's closest competitors. FDI projects are overseas investments into existing projects and where the foreign investor gets majority ownership.
Despite all of the uncertainty that the Brexit deal has caused, it seemed that 2017 still saw a lot of projects going the city's way. Out of the total FDI projects secured by the nine major global financial hubs, London was able to get 28 percent of these projects. London competed against Dublin, Hong Kong, Frankfurt, New York City, Luxembourg, Paris, Tokyo and Singapore.
However, London was not the only winner when it came to FDI. Despite having the most projects, the total value of investments was just £4.23 billion. Singapore holds the first place in having the most value with investments totalling £4.73 billion. That's a lot of investment in one small nation.
With these results, London has secured £8.6 billion worth of foreign investments in the period from 2013 to 2017. This performance is incredible for a financial center that is acknowledged to be a powerhouse globally. However, London's position as the preeminent financial center may be in danger.
The Looming Brexit
This is because of the threat of a no-deal Brexit is very close to becoming a reality. London's financial services serve as a magnet for foreign investments and provide a lot of money for the UK but this is mostly because of easy trading access.
In a statement, Catherine McGuinness, policy chairman of the City of London Corporation, said
The U.K. leads the world when it comes to exporting financial services and we have a number of strengths that appeal to investors. We cannot, however, afford to take this position for granted. Foreign investment flows can shift quickly so it is vital that we secure a positive Brexit deal that provides confidence and clarity for the sector.
There are already signs of a slowdown as figures showed that there has been a notable nine percent drop in the UK economy this year. Additionally, new investments were down by 5 percent, with mergers and acquisitions going down another 13 percent. This may get worse as the Brexit deadline gets closer and no formal deal is finalized.
