Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to the City of.
Speaker 2: London, The City of the City, The City of London.
Speaker 1: Mind begad between and the financial heart of the country.
Speaker 3: The City, the City.
Speaker 1: Welcome to in the City and Clear of the Doors Pea.
Speaker 3: Welcome to in the City. From Bloomberg.
Speaker 4: Each week we dive into a story that's crucial to
Speaker 4: the world's financial capitals. I'm David Merritt, and this week
Speaker 4: we are actually recording from New York City, but our
Speaker 4: story is London itself and how it's doing in the
Speaker 4: ever present battle for supremacy as the world's financial capital.
Speaker 4: We've been looking at the latest ZN Global Financial Centers
Speaker 4: Index and it's got you know, what you could argue
Speaker 4: is perhaps a surprising result. It shows that London is
Speaker 4: closing the gap with New York for the title of
Speaker 4: the world's top financial center. This is the thirty seventh
Speaker 4: edition of the Global Financial Centers Index and it showed
Speaker 4: London in second place, but it had climbed twelve points
Speaker 4: since September. London is well ahead of the pack in
Speaker 4: terms of the European rankings. It's got a nineteen point
Speaker 4: lead over Frankfurt, which isn't even in the top ten,
Speaker 4: and London was in the top three categories for eight
Speaker 4: major financial industries and was the first for banking and
Speaker 4: in fintech. It cut the gap with New York to
Speaker 4: a single point. So a subject we've covered on this
Speaker 4: podcast over the years, a lot of all the uncertainty
Speaker 4: of Brexit, all the head winds the UK's faced, the
Speaker 4: city seems to be thriving.
Speaker 3: So how has it pulled it off?
Speaker 2: Well?
Speaker 4: To talk about this, I'm delighted to be joined by
Speaker 4: Chris Hayward, the Policy Chairman of the City of London Corporation.
Speaker 3: Chris is the principal.
Speaker 4: Spokesperson and advocate for London's global financial and professional services industry,
Speaker 4: and with the career spanning over four decades, has founded,
Speaker 4: led and expanded businesses across industries ranging from aviation, publishing
Speaker 4: and construction, both in the UK and around the world.
Speaker 3: Great to have you here, Chris.
Speaker 5: Fantastic to be here, David, and you know.
Speaker 3: So you're on a visit to New York as well.
Speaker 4: They like to have these banners on the lamp posts
Speaker 4: around here, don't they saying the world's financial capital.
Speaker 3: Are you here to sort of disrupt that absolutely.
Speaker 2: I mean I won't rest until the City of London
Speaker 2: is number one, and it's always close between us and
Speaker 2: New York. But frankly, you made the point that we
Speaker 2: see to be doing rather well. I think we're in
Speaker 2: a renaissance period actually the city.
Speaker 5: At the moment.
Speaker 2: We're finding that we can't actually build tall office toiles
Speaker 2: fast enough to cope with the investment and development needs
Speaker 2: of big businesses around the world, and our vag rates
Speaker 2: in those offices are down to one point two percent,
Speaker 2: which is remarkable. Frankly when you think about it. Now,
Speaker 2: what's been happening well past ten years. I've had people
Speaker 2: telling me, well, London's moving east, everything's going to Canary Wharf,
Speaker 2: everything's going further to New em et cetera.
Speaker 5: Well it's now coming back.
Speaker 2: Just done the deal with HSBC to move them back
Speaker 2: into the city. That's eight and a half thousand new jobs.
Speaker 2: We've done a deal with Clifford Chance, the big global lawyers,
Speaker 2: to build new offices for them, and there are others
Speaker 2: in the pipeline. And then we're finding it's coming the
Speaker 2: other way as well, from the West Ends. So some
Speaker 2: of the hedge funds who have traditionally been in Mayfair
Speaker 2: are saying can they come into the city, So we
Speaker 2: are really really expanding.
Speaker 4: Maybe I rashly said it's a surprise, because obviously it
Speaker 4: doesn't seem like it's a surprise to you that we've
Speaker 4: got at the rank. Maybe we've over agonized and this
Speaker 4: podcast being a venue for that about the rise of Paris.
Speaker 3: For instance, for Europe.
Speaker 4: Whatever happened to Paris is eating London's lunch.
Speaker 5: Well, look it hasn't happened. It's a simple thing.
Speaker 2: I mean, the city of London has proved itself totally
Speaker 2: resilient in the wake of Berexit. I mean, it's been
Speaker 2: a long and painful divorce of h years. It's been very,
Speaker 2: very tricky and my fear, i'd be absolutely honest with
Speaker 2: you eight years ago, was that we would lose huge
Speaker 2: numbers of jobs to Europe, particularly in passporting. Now the
Speaker 2: reality is in the financial services sector that I speak for,
Speaker 2: it's a total of seven thousand jobs across the whole
Speaker 2: of the United Kingdom. And of course new jobs have
Speaker 2: been created on the back of European companies who now say, well,
Speaker 2: because you're out of the EU, we need to open
Speaker 2: up in the city. We need to put our back
Speaker 2: offices in the city as well. So overall we've proven
Speaker 2: ourselves resilient to the Brexit challenge.
Speaker 4: We've got a big EU UK summit coming up or
Speaker 4: a kind of this chance for Starmer. He's talking about
Speaker 4: resetting with the EU, so presumably things might get easier.
Speaker 4: I mean, I guess the fear was we were going
Speaker 4: to try to diverge. The EU could play a bit
Speaker 4: more hard ball and they could have made things harder
Speaker 4: for us in the agents they could and you know,
Speaker 4: let's face it, the French you wouldn't blame and want
Speaker 4: a bit of that business. They want a bit of
Speaker 4: that traders and investors to come to Paris. But do
Speaker 4: you feel like we're in a bit more an equilibrium
Speaker 4: that Europe needs ass We need them, but we've got
Speaker 4: the balance right.
Speaker 2: Look, I think that's true. And I mean, actually, when
Speaker 2: you talk about the reset, I think we've got to
Speaker 2: manage expectations around the reset because there is no backdoor
Speaker 2: route back into the EU, even if we wanted one.
Speaker 2: So we've got to be realistic about how much can
Speaker 2: be achieved by the reset. But what we need to
Speaker 2: do is to start being able to talk to each
Speaker 2: other and work with each other once again, and we
Speaker 2: haven't done that for eight years.
Speaker 5: It's been very, very tough.
Speaker 2: But now we've got our Financial Services dialogue up and
Speaker 2: going again with the European Commision, so that means our
Speaker 2: Treasury are talking to them and discussing with them, and
Speaker 2: Europe I think has now accepted that where we are
Speaker 2: is that we want to be. We want to be
Speaker 2: good friends and neighbors with them because they are critically
Speaker 2: important to us. There are closest trading nation and it's
Speaker 2: in our interests, frankly to work together, particularly things like regulation.
Speaker 2: There are so many areas around you know, AI, around
Speaker 2: a grand Green finance, and all sorts of areas in
Speaker 2: financial services where we need to work together. But I
Speaker 2: do think the other area where we will find that
Speaker 2: there is a restructuring of the relationship is around defense,
Speaker 2: because we now know that the President of the United
Speaker 2: States has told Europe probably rightly, that we now need
Speaker 2: to put money in ourselves as well. We're not going
Speaker 2: to be able to rely on the US to completely
Speaker 2: as subsidize as it were, and so every nation state
Speaker 2: in Europe has got to work together on that, as
Speaker 2: they have on things like, you know, a solution to
Speaker 2: the Russia, the Russia invasion of Ukraine.
Speaker 4: There was an argument was in there I remember from
Speaker 4: the Europe well, the sort of pro Brexit cant was
Speaker 4: saying that, you know, Europe can't just cut itself off
Speaker 4: for the city of London. It's going to increase the
Speaker 4: cost of capital for European companies. They're going to harm
Speaker 4: their own economy. But I guess the temperature was so
Speaker 4: hot at one point I was like, well, they are
Speaker 4: going to do it anyway.
Speaker 2: Yeah, it was just too red hot frankly, but it's
Speaker 2: calmed down a lot, and it is in the interests
Speaker 2: of both parties to work together and to set that
Speaker 2: we are outside of Europe. But the reality is if
Speaker 2: you think of all the European banks, right, they may
Speaker 2: well do their domestic banking in their countries, but when
Speaker 2: it comes to international banking, it's all done through London.
Speaker 2: So London will remain and has remained a hub.
Speaker 3: I mentioned in the survey.
Speaker 4: It's across those all those different metrics that kind of
Speaker 4: number one in banking. I mean, what are the area
Speaker 4: and fintech nipping at the heels of New York City,
Speaker 4: which is something that obviously the city has been very
Speaker 4: keen to position itself as a world leader. What are
Speaker 4: the kind of the hour there are is where we
Speaker 4: need to do a bit better.
Speaker 2: Fintech we have done really well, although let's not go
Speaker 2: over the top on it. I mean we're very good
Speaker 2: at startups, we're not so good at scale ups. You
Speaker 2: made reference earlier, David, to the issues with the listings, right, Yes,
Speaker 2: well precisely so. Listings. Look, listings are down, IPOs are
Speaker 2: down all over the world. But there's no doubt that
Speaker 2: our high growth British businesses of which FinTechs are a
Speaker 2: good example, when it comes to listing often will come
Speaker 2: a list on Nasdaq rather than on the London Stock Exchange.
Speaker 2: Why because they can get valuation that's two and a
Speaker 2: half times what they get in the United Kingdom, and
Speaker 2: they can also of course get the increased capital from
Speaker 2: the US and we need to address that. One of
Speaker 2: the ways we're addressing it is something called the Mansion
Speaker 2: House Compact, which is where we've signed up eleven big
Speaker 2: pension providers who said they will contribute five percent of
Speaker 2: DC pensions to a pot to a fund which ultimately
Speaker 2: will build around fifty billion pounds and that will be
Speaker 2: invested in high growth British businesses and I think that's
Speaker 2: terribly important. Obviously, the US Stock Exchange, New York Stock
Speaker 2: Exchange has become a challenge for US that in that area,
Speaker 2: but it's an area where I think we can continue
Speaker 2: to do more.
Speaker 4: Do you think the events of the last few weeks
Speaker 4: have changed it a bit? I mean, if you are so,
Speaker 4: you know, you're a fintech company with you know who
Speaker 4: can remain name is you're thinking maybe you're headquarters in London.
Speaker 4: You may have been thinking about in New York. You
Speaker 4: look at the volatility that's been occurring in the United
Speaker 4: States market and the cical uncertainty and all the question
Speaker 4: about tariffs and even visas and all these questions.
Speaker 3: Do you think again are they thinking again?
Speaker 2: Well, look, let's be clear about the tariffs. We don't
Speaker 2: welcome tariffs. I mean, that's a fundamental statement to make
Speaker 2: at the start. On the other hand, the United Kingdom
Speaker 2: has let's just say, got away with it reasonably ten
Speaker 2: percent actually has no tariffs on services.
Speaker 5: That's very welcome.
Speaker 2: And I do think I know we always play on
Speaker 2: this words the special relationship. But I do think there
Speaker 2: is a special relationship between the United Kingdom and the
Speaker 2: United States. But America at the moment is volatile. It's
Speaker 2: politics is volatile. On the other hand, Europe is also
Speaker 2: overregulated and is actually not experiencing growth. And the one
Speaker 2: thing we've got to do in the United Kingdom is
Speaker 2: to grow the economy, and this is what the UK
Speaker 2: government has said, and that means we've got to start
Speaker 2: thinking outside the box on things like risk. So what
Speaker 2: I think is very good in America is that you
Speaker 2: know where entrepreneurs fail, you pick them up, dust them down,
Speaker 2: put them out there again. Unfortunately, we need more of
Speaker 2: that culture of the United Kingdom. At the moment, you're
Speaker 2: a bit of a pariah if your business fails. So
Speaker 2: what I'm saying to the Chancellor and to the government
Speaker 2: is we need to encourage what I call responsible risk
Speaker 2: taking because since the financial crash, we more or less
Speaker 2: lost that and you will never get economic growth if
Speaker 2: there's not an element of risk.
Speaker 4: Right, And I was hoping this on Wednesday in New
Speaker 4: York we had a negative GDP print this morning for
Speaker 4: the first quarter, which from forecasts of much more positively.
Speaker 4: Only weeks ago people are talking about the probability of
Speaker 4: recession here. Britain's not going to escape the sort of
Speaker 4: down to her that that would induce, is it now?
Speaker 5: It's not.
Speaker 2: Unfortunately, if that happens, the chances are Britain would end
Speaker 2: up following the same route.
Speaker 3: I'm afraid the difference.
Speaker 4: I guess Rachel Reeves's position is difficult and precarious, isn't it.
Speaker 4: There was a lot of talk before the election about
Speaker 4: how friendly she was going to be the city, and
Speaker 4: what I think our reporting has shown since then is
Speaker 4: that people feel that she hasn't stood up those promises.
Speaker 3: How does how what's your scorecard for Rachel Reeves? Well?
Speaker 5: Look so well?
Speaker 2: I wish I should give her an actual number out
Speaker 2: of ten, because that's not my job. But what I
Speaker 2: would say is this, she hasn't got a lot of
Speaker 2: head room. You're quite right now. She will argue and
Speaker 2: did argue when she came in there was this big
Speaker 2: black hole.
Speaker 3: A lot about that, But.
Speaker 2: To be honest, every government does that when they come in.
Speaker 2: There's always a big black hole left by the last government.
Speaker 2: We've said to her that we need to have a
Speaker 2: globally competitive tax system, which we haven't got at the moment.
Speaker 2: She knows that that's something that she's got to achieve.
Speaker 2: We've also given her some advice around something we call
Speaker 2: Vision to Economic Growth, which is a piece of work
Speaker 2: I commissioned a couple of years ago which came out
Speaker 2: with ideas as to how you get that growth. And
Speaker 2: I'm very pleased to be able to tell you that
Speaker 2: one of those ideas is that we increase our foreign
Speaker 2: direct investments and we've agreed with the Treasury and with
Speaker 2: the Chancellor that we the City of London Corporation will
Speaker 2: partner with them to develop an investment hub, a concierge service,
Speaker 2: if you will, because it's my belief we've slipped behind
Speaker 2: our global competitors in the area and direct investments, and
Speaker 2: we don't make it very easy for people to invest
Speaker 2: in the United Kingdom right, it's actually a challenge. You
Speaker 2: actually have to work quite hard to do it. What
Speaker 2: we've said to the other story, if they did they
Speaker 2: did a global investment summit within their first few weeks
Speaker 2: and they hosted did a Guildhall global headquarters.
Speaker 5: Well it was a bit quick, I think in a way.
Speaker 3: What did you do before the budget didn't they.
Speaker 2: Did, and there was the uncertainty. But what I do
Speaker 2: believe is that the Rachel Reeves genuinely believes that economic
Speaker 2: growth is the only way out of the crisis. That
Speaker 2: you cannot spend more on public services if you don't
Speaker 2: create growth and increased wealth. And therefore, what we've got
Speaker 2: to do, I think all of us in the City
Speaker 2: of London Corporation and in the sector that we represent,
Speaker 2: is try and keep a focused around policies that will
Speaker 2: drive that growth. Now, growth doesn't come overnight. Let's be
Speaker 2: absolutely clear. You can't waive a magic wand and create
Speaker 2: economic growth. But we've had no economic growth or precious
Speaker 2: little in the United Kingdom for the past fifteen sixteen years,
Speaker 2: whilst look at the growth that you've had here in
Speaker 2: the United States. It's been remarkable, frankly, and I think
Speaker 2: that's also about culture. It's also about how you get
Speaker 2: the regulators, the financial regulators, to contribute towards making us
Speaker 2: globally competitive. So regulation is important. Proportionate regulation is we
Speaker 2: don't want to race to the bottom, and that's one
Speaker 2: of the things i'd like to see the government act on.
Speaker 4: Is there a risk in that you might want us
Speaker 4: to divert it a little bit too much from the
Speaker 4: from the European norms on this, I mean, how do
Speaker 4: we try that back alone? It make that sounds a
Speaker 4: little bit more risk, a.
Speaker 5: Little bit more time.
Speaker 3: Yes, risk happitite No, No, not severing ties with Europe.
Speaker 2: No, I don't want to semitize with with Europe. Just
Speaker 2: the obsellant to build on that relationship. But let's be blunt.
Speaker 2: We're out of Europe now. We don't have to do
Speaker 2: what Europe does right. We are an independent nation and
Speaker 2: that allows us the flexibility to look at our own
Speaker 2: regulations and decide what's the best route forward for us.
Speaker 2: And I do think we need to diverge a bit.
Speaker 2: I do think we need to take a bigger, a
Speaker 2: better approach to risk. It's very important that we do.
Speaker 2: But it should be responsible risk taking, not rash risk taking.
Speaker 2: But we have to recognize that part of the economy,
Speaker 2: part of an ecoding cyclists that businesses will fail as
Speaker 2: well as succeed.
Speaker 3: Do you have alignment on that point.
Speaker 4: Do you think with the regulators that we've gone in
Speaker 4: the position at the moment in Britain, or is there
Speaker 4: a divergence of views on that point.
Speaker 2: Look, I think you've got to except, first of all,
Speaker 2: the regulators are independent. Secondly, regulators do what says on
Speaker 2: the tin. They regulate right, and I think they have
Speaker 2: been very nervous because they know that if things go wrong,
Speaker 2: they're summoned in front of a select committee of the
Speaker 2: House of Commons, They're hauled over the coals and Todd,
Speaker 2: you weren't doing your job as a regulator. Why has
Speaker 2: this business failed, Why is this person's pension gone? And
Speaker 2: therefore what we've got to do is give them some protection,
Speaker 2: to allow them to feel more confident, to lighten up
Speaker 2: a bit and allow some risk to come through.
Speaker 4: Chris, I just want to go back to what you
Speaker 4: said at the beginning about the building and the vacancy raids.
Speaker 4: I think you know next time you come on the podcast,
Speaker 4: we will do it in our London headquarters, right in
Speaker 4: the middle of the City of London, by the Bank
Speaker 4: of England. The skyline in the city keeps on evolving, changing,
Speaker 4: keeps growing more high rises. Can you give us a
Speaker 4: flavor of where you see the next few years going.
Speaker 4: If this demand continues, are we going to see that
Speaker 4: more mustering skyscrapers in this in the square mile.
Speaker 3: Is it going to continue to grow?
Speaker 2: Look, I think the answer to that is yes. I
Speaker 2: mean the way that I lead the City of London
Speaker 2: Corporation is to treat it like a business. If it
Speaker 2: isn't growing, it's falling back. You cannot stand still against
Speaker 2: global competition, right, So, whether it's up against New York,
Speaker 2: whether it's up against any other city, we have to
Speaker 2: keep growing. When I first took on this role, it
Speaker 2: was immediately in the aftermath of COVID, and the first
Speaker 2: thing that concerned me most was was the SMEs, because
Speaker 2: our SMEs had been obliterated, the little coffee shops, the
Speaker 2: sandwich stores, et cetera. And I said, what we need
Speaker 2: is new football and new spend. And so I launched
Speaker 2: a flagship policy called Destination City, which is all about
Speaker 2: reimagining the city. And now we've got a city with
Speaker 2: a vibrant nighttime economy, with a really strong retail offering.
Speaker 2: We've got workers who Demo Graphic is much younger than
Speaker 2: we've ever had before, and they want to work and
Speaker 2: play in the same place. When I first came into
Speaker 2: the city thirty five years ago, the pubs closed at
Speaker 2: seven or eight o'clock in the evening. You had to
Speaker 2: go to the West End if you wanted a night life.
Speaker 3: It is actually heaving on the streets Thursday night.
Speaker 5: Thursday is the old Priday.
Speaker 4: There's more places to there's more, there is great places
Speaker 4: three right, it's great place.
Speaker 5: It's fantastic restaurants, great bars.
Speaker 2: In the Bloomberg Arcade, in the Bloomberg Arcade, particularly in
Speaker 2: the Bloomberg Arcade number one, number one, and the city
Speaker 2: is very, very different to what it was twenty thirty
Speaker 2: years ago. Now do I see this continuing to happen, Well,
Speaker 2: it certainly will if I have anything to do with it,
Speaker 2: because I believe that you have to continue to grow,
Speaker 2: to evolve, and that the way to do that is
Speaker 2: to make your city the most attractive place for businesses
Speaker 2: to invest and want to be there.
Speaker 3: Chris has been a pleasure having you on the podcast.
Speaker 4: Thank you very much, David, thanks for listening to this
Speaker 4: in the City from Bloomberg. This episode was hosted by
Speaker 4: me David Merritt. It was produced by Summer Sardi, Moses
Speaker 4: and Am and tala Amadi, Brendan Francis, Newnham, is our
Speaker 4: executive producer special thanks to Chris Hayward. Please subscribe, rate,
Speaker 4: and review wherever you listen to podcasts.