Paris and Frankfurt have their work cut out if they’re going to seriously challenge the City of London.
That’s the conclusion of an analysis by London-based think tank New Financial, which found five times more international financial activity in the U.K. than France or Germany.
While the report relies on data from 2019 — before Brexit came into effect, and before London lost its crown as Europe’s top place to buy and sell shares — it underlines the City’s dominant role in Europe as a hub for derivatives and foreign-exchange trading, asset management, venture capital and banking.
“This report shows you would have to move a huge amount of activity from the U.K. before France, Germany or any other EU financial center is significantly closing that gap,” William Wright, New Financial’s managing director, said in an email. Wright said that even if 10% of all international activity in the U.K. were to relocate, the country “would still be a long way ahead.”
The U.K. ranked as the world’s second largest financial center after the U.S., according to the report. China was third, while France and Germany were sixth and seventh respectively.
Still, the U.K.’s lead will have been dented by Brexit. Financial firms have been largely unable to use their London bases for business inside the bloc, forcing banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. to move hundreds of billions of dollars in assets and thousands of staff to the continent.
The Brexit trade deal left out financial services, while a separate accord on how EU and U.K. financial regulators would cooperate has also run into problems as overall relations threaten to turn sour. The bloc has signaled it’s in no rush to grant so-called equivalence decisions that would enable European business to be done from London.