The City of London’s dominance in international investment is largely due to its unprecedented success in attracting foreign investors. Last year, the final phase of Covid-19 and Brexit narrowed its presence in this region of Europe to the lowest level of this century.
The UK received FDI inflows to 56 financial services projects last year, up from 99 in 2019 UK Financial Services Business Attraction Study EY. While the United Kingdom is the most attractive place in Europe, France is in second place with 49 projects, ahead of Germany by 37.
Although the UK still holds one-fifth of all foreign direct investment in financial services in Europe, that figure is expected to fall to 26.7% in 2019, the report said. This is a small benefit since the EY survey was launched in 2000.
Reducing the gap could raise concerns about the city’s ability to continue to capture the bulk of foreign currency now that it cannot provide transparent access to the EU.
Learn more about Brexit and the city of London
The role of the City of London as the center of European finance has been somewhat shaken for a decade, with the UK voting to leave the constituency. Banks have moved across the canal and into businesses and jobs Prolonged uncertainty over its future relationship with the EU could lead to further changes and undermining one of the pillars of the UK economy.
However, the report says London could easily retreat. It is popular among investors, and if the UK is properly positioned the investment will increase as the world emerges from the epidemic. The United States was the main source of investment in the United Kingdom and Europe, with 37% and 23% of projects, respectively.
“Now, after Brexit and the epidemic, UK financial services need to establish themselves permanently not only in Europe but also on the world stage, focusing on FinTech and innovation and becoming the global leader in sustainable finance,” said Anna Anthony, Managing Partner, UK Financial Services at EY.