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The world's top financial centres

  • Global financial centres
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Article
Published 2 months ago

If you are looking to move abroad for work or to set up a business, you may not be seeking the most pristine beaches or warmest climates, but rather international business hubs. The Global Financial Centres Index (GFCI) is a bi-annual ranking that lists the world's leading financial centres. We've taken a look at the results of the 22nd index.

Nisha Sawon

Editorial staff

Top five cities

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Looking at the long term trends for the current top five cities since the index started, it is clear some have had a rocky road to the top. The three leading Asian cities (Tokyo, in particular) have made impressive progress since the index began as certain Asian countries have moved further to the forefront of the global economy. New York, meanwhile, had been holding relatively steady until quite recently, when there began a noticeable drop off that certainly hasn't been helped by the level of uncertainty that has followed the 2016 US presidential elections. In spite of Brexit, however, London remains at the top of the pack (as it has mostly from the first edition of the index), though there has been a slight drop in its rating.

London has held onto first place and (somewhat remarkably) only seen a drop of two points in its rating since the last index was published in March. It also leads in all areas of competitiveness, as measured by the GFCI (business environment, human capital, infrastructure, financial sector development and reputation). However, with the onset of Brexit, it may be the case that factors such as human capital are affected, depending on the status EU citizens currently residing in the UK are afforded, and what freedom of movement EU citizens will be granted when it comes to working in the UK.

New York saw a more significant drop of 24 points in its rating, however, it remains the second most significant global financial capital. This is perhaps a best case scenario for the city, given the drop in rating other US cities have experienced. It takes the second place in most areas of competitiveness, except for reputation, where it comes fourth.

Hong Kong has dropped just eleven points, and overtakes Singapore to claim third place, overall. This is indicative of China's leading global economic position as a whole, with Shanghai in sixth, Beijing in 10th and Shenzhen in 20th place. When it comes to measures of competitiveness, Hong Kong matches its third place in human capital, infrastructure and sector development, however, takes second place when it comes to reputation.

Down one position to fourth having dropped 18 points in its rating, Singapore continues to be regarded as one of the leading financial centres. Similarly to Hong Kong, the city maintains fourth place across most measures of competitiveness, but jumps one place up to third in terms of reputation, further indicating just how it is viewed by many as a top spot for business.

Tokyo lost 15 points, but remains the fifth most significant global financial centre. Regarding competitiveness, it holds the sixth place for sector development and fifth for its reputation as a financial centre. However, only manages ninth for availability of human capital and seventh for infrastructure.

Highest climbers and biggest losers

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Although Athens (capital of much beleaguered Greece) has seen its rating go up by an impressive 89 points, it has only moved up four places to 84th. Reykjavik has also gained 48 points to its rating, however, it has dropped down four places, thanks to new entrants that have found themselves higher up in the overall rankings.

After seeing a big drop in the previous index, Vienna has recovered to the tune of 45 points, moving up 22 places to 42nd. The British Virgin Islands gained 38 points, and has moved up 14 places to 37th, following a large drop in the last edition of the GFCI. However, it is yet to be seen what impact Hurricane Irma will have on the country's significance as a financial hub, as the infrastructure of financial service providers have been affected by the severity of the storm, despite the nature of the BVI meaning businesses incorporated there may not be physically present.

Although Frankfurt has gained only 3 points, it is up 12 places to 11th, thanks to its steady rating, in contrast with drops in rating by other leaders. It also comes in seventh in the industry sector rankings for both banking and professional services. Frankfurt is one of the cities frequently cited as a beneficiary of Brexit, as businesses look to attractive cities in the EU. It is yet to be seen how much Frankfurt can improve its clout following the UK's departure.

It is safe to say the US hasn't fared well of late, and the position of its cities as international financial hubs seems to be wavering in several cases. US cities have seen some of the biggest rating losses in the rankings. Chicago shed 40 points and has dropped down 17 places to 24th. Washington, D.C. also loses 40 points from its rating and drops down 16 places to 28th, overall, though it (unsurprisingly) is ranked 10th for its global position in the government and regulatory sector and 12th for the banking industry sector. San Francisco, the home of Silicon Valley, is down 31 points and 10 places, to 16th. This provides a stark contrast to competitive global economy China's rise in the rankings.

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