London edges closer to New York in battle for financial centre top spot

London is closing in on New York for the title of the world’s top financial centre, according to research by an influential think tank, as the capital pulled away from its European rivals.

The Z/Yen Global Financial Centres index, which ranks 121 locations, showed London remained in second place with a rating of 750 points, up three points from its previous report in March and closing the trans-Atlantic gap.

New York scored 764 points to retain the top spot, although its rating fell by one point in the six months.

The Big Apple has topped the biannual ranking ever since it overtook London in September 2018. However, the London-New York gap has narrowed by 15 points over the last 18 months.

The average rating of centres in the index ticked down 0.42 per cent from March, suggesting little change in confidence in the financial sector or the outlook for the world’s leading economies, with slow but continued growth and inflation falling.

The top five centres remained unchanged. Hong Kong overtook Singapore to claim third place, with San Francisco in fifth.

Dublin was the only leading centre to gain more than four places, surging to 14th from 25th. Every other European centre in the top 20 – Frankfurt, Geneva, Paris, Zurch and Luxembourg – saw their rating drop.

“Geopolitical risks are identified as the greatest challenge facing financial centres and
their development,” said Mike Wardle, Z/Yen’s chief executive.

“However, confidence in leading international financial centres remains strong, and many leading financial centres improved or maintained their rating in [the index], with a high degree of stability in the rankings.”

The Square Mile suffered a bruising 2023 that saw City dealmaking crater to a post-financial crisis low, just 23 firms float on the London Stock Exchange and a flurry of big names opting to publicly list overseas.

But this year has seen signs of a rebound, with interest rate cuts bolstering appetite for deals and successive governments eyeing sweeping reforms to inject more life into Britain’s capital markets.

An early test for Keir Starmer’s plans for the City is set to be Labour’s flagship investment summit on 14 October, designed to bring together high-profile international business figures.

Whitehall officials are reportedly keen to announce investment deals worth tens of billions of pounds on the day, although it emerged last week that fewer than 150 of the 300 companies that Labour ministers had pledged to attract to the summit had confirmed their attendance.

Elsewhere, bankers are holding out hope for a full recovery of the UK’s IPO market in 2025, noting positive investor sentiment helped by political stability and the Financial Conduct Authority’s overhaul of listing rules in July.

The Z/Yen index’s top 10 was rounded out by Chicago, Los Angeles, Shanghai, Shenzhen and Frankfurt – the latter two replacing Geneva and Seoul in the group.

The index was compiled using 143 factors provided by third parties, including the World Bank, OECD and United Nations, as well as 37,830 assessments through an online questionnaire.

Z/Yen’s report was co-authored by Lord Mayor of the City of London Michael Mainelli, who is the think tank’s chair.