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London is now only one point ahead of Shanghai, which retained its third place.
- The average rating of centers dropped 3.5 points, compared to an average 41-point drop six months ago.
- Covid-19, heightened confidence in the financial system, and Brexit affected London's ranking.
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New York is still the world's top financial center, retaining its spot ahead of London and Shanghai, according to an index of key global business hubs.
London lost ten points in the Global Financial Centres Index, reducing its lead on third-placed Shanghai to just one point. Hong Kong overtook Singapore for fourth place.
There was little movement in the top half of the main index, which contains 114 cities. However, the report states that "in the lower half of the index, there was more volatility, perhaps reflecting some uncertainty about the resilience of emerging and smaller centers."
Overall ratings are still below their pre-pandemic levels, but the decline is now far less marked than it was six months ago. On average, financial centers were rated 3.5 points lower in this most recent edition of the index, compared to an average points drop of 41 six months ago. This "may indicate more confidence in the financial system than in the first stages of the covid-19 pandemic," the report said.
The relative weakness has been down to factors such as ongoing uncertainty around the economic impact of Covid-19, international trade and geopolitical and local disruptions.
The downward trend was especially pronounced in London, which lost 23 points. Asian finance hubs are quickly catching up with the UK capital. Shanghai, Hong Kong and Singapore all gained one point and are now only a few points behind, meaning they could push past London any moment.
Brexit may have played a role in the weakening of London's position, to the benefit of other European cities.
"Frankfurt replaced San Francisco in the top 10 in this edition, gaining seven rank places, perhaps benefiting from the exit of the UK from the European Union," the report said.
The Global Financial Centres Index evaluates and ranks the competitiveness of major financial centres every six months, using a wide range of quantitative data-based measures, as well as online questionnaires.
Areas assessed include business environment, human capital, infrastructure, financial sector development and reputation. It is used as a basis for policy makers and investors.
