Magazine article Management Today

London Sits on Its Laurels

Magazine article Management Today

London Sits on Its Laurels

Article excerpt

An over-optimistic analysis of the international power and influence of the capital's financial centre fails to convince

The past 30 years have been a golden age for the City of London. Dynamic and prosperous, it has stood out in contrast to the rest of the British economy as a European and global leader, While Paris and Frankfurt have struggled to capture some of its wealth, and Tokyo has slipped back as a source of international capital, London has strengthened its position alongside New York as one of the world's great financial centres.

David Kynaston and Richard Roberts, two distinguished business historians, have set out to explore this 'City State', which they argue has never been so powerful as it is now

Maybe, they admit, the City doesn't have all the answers -- it is, after all, a rather two dimensional place, narrowly concerned with profit and loss. And perhaps it should not be unambiguously triumphant' (their italics). But the City could become even stronger in the future, as more and more countries become integrated into the international financial system.

What they don't seriously consider is the possibility that the period since the late 1980s has been truly exceptional in the history of London's financial markets, and that their relative strength is already deteriorating. Here are six reasons why this book may just turn out to be wildly over-optimistic.

Leadership: in terms of raw power, the City's institutional leadership is a shadow of its former self. Its chief spokesman used to be the Bank of England. but that role came to an end in 1997 when the Government took away its regulatory powers.

The securities markets are dominated by international companies, run from New York and Switzerland. The insurance companies have lost their position in the global league tables and are also heading for foreign ownership, while the clearing banks have largely failed to spread their strength much beyond Britain's high streets.

And whatever you think about the eventual impact of the euro, it is undoubtedly creating a major power base in Frankfurt.

Regulation: the Financial Services Authority is increasingly powerful in the City-and a good thing too, most people would say. The old system of multiple regulators, run largely by practitioners. was too complex and much too cosy. …

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