Luxembourg for Finance deputy CEO Tom Théobald, pictured, says certain financial activities in London will simply shift entirely out of Europe after Brexit
Photo: Luxembourg for finance
“…what is important to us is that Luxembourg rightly continues to rank as one of the leading international financial centres in Europe.”
The 23rd edition of the Global Financial Centres Index (GFCI) was published on 21 March 2018, claiming that western European financial centres remain volatile and pushing Luxembourg seven places back in the international ranking.
It went on to note that, “There is increasing overall confidence for the leading financial centres,” especially London which was ranked number one. Tom Théobald, deputy-CEO of Luxembourg for Finance (LFF), talked to Delano to provide some context.
Margaret Ferns: In your view, how has London retained top place given that it has Brexit hanging over its head?
Tom Théobald: Brexit hasn’t actually happened yet, so it is difficult to gauge its immediate impact on London as a financial centre. Generally speaking, no one expects London to just stop being one of, if not the leading financial centre in the world--at least not in the short-term. Brexit’s impact will be gradual: i.e. non-European banks no longer choosing London as their default hub to enter Europe, as well as a gradual shift of certain activities to other centres on the continent, including Luxembourg (which has already around 20 Brexit-related announcements so far). The other risk that we see in the future, for Europe as a whole, is that rather than choosing another centre on the EU continent, certain financial activities in London will simply shift entirely out of Europe to centres such as New York, Hong Kong or Singapore.
MF: How do you explain this European volatility mentioned in the GFCI?
TT: The top European financial centres have actually not shifted: London, Frankfurt and Luxembourg remain the 3 leading EU centres. However, non-European financial centres, and specifically Asian ones, have certainly gained in significance over the past years, and this is also reflected in the GFCI, notably in the high number of non-European financial centres in the global top 20. To me this confirms that one of the EU’s priorities should be to continue to work on making the single market for financial services as seamless as possible and avoid adding barriers to cross-border financial services to ensure that Europe remains competitive on a global scale.
MF: How do you explain the fact that Luxembourg has dropped 7 places? Should we be worried?
TT: I would put this in the broader context of the GFCI. It’s less about Luxembourg “dropping” in rank than other financial centres, mostly in the US and Canada, increasing their score. If you look at the actual rating, Luxembourg has once again managed to increase its overall score. It is also important to note that Luxembourg continues to rank among the Top 15 financial centres that are most likely to grow in significance over the next years. Finally, what is important to us is that Luxembourg rightly continues to rank as one of the leading international financial centres in Europe.
The Global Financial Services Index (GFCI) by Z/Yen Partners and the China Development Institute rates 96 financial centres around the world and is published on a quarterly basis. According to the latest report, the top ten financial centres worldwide are (in descending order) London; New York; Hong Kong; Singapore; Tokyo; Shanghai; Toronto; San Francisco; Sydney and Boston.