It’s true, Paris isn’t far behind London but we can still win the race to be the top city

Since Brexit, Londoners have feared the moment Paris would overtake the city for the crown of financial services, but we can still keep our advantage if we compete with France’s regulatory environment, writes Chris Hayward.

Only weeks ago, a flurry of shockwave reports concluded that Paris had overtaken London as Europe’s biggest stock exchange.

According to the figures, the French stock market had a combined value of $2.823tn, approximately $2bn greater than its British counterpart.

But on every other metric –  global share of exports, derivatives trading and trade surplus – London exceeded Paris.

Nonetheless this should act as a warning sign that London mustn’t rest on its laurels. Our global competitors are waiting in the wings to snatch our crown as the number one financial centre in the world.

So what’s the reason behind Paris’ rise and what can London learn from this? That’s what I’ll be discussing with leading industry figures including the French Treasury and Central Bank next week as I cross the Channel for two days of business meetings.

The French government have taken a number of steps to attract more international financial institutions, investment banks and asset managers. They’ve outlined plans to foster a fintech ecosystem to try and outrival London’s by reducing regulation, improving the tax system and providing incentives for companies to invest.

We should not be complacent about the competition that Paris offers. But similarly, we should not forget that London has tremendous strengths.

Our rule of law, language, timezone and access to talent continues to place us head and shoulders above the rest. London holds the top spot in attracting foreign investment in financial and professional services, attracting 114 projects in 2021, more than New York and Paris combined.

We have also seen developers and investors continue to show confidence in the Square Mile through major planning applications. In 2021, more than 4 million square feet of new office floorspace was approved – an increase of almost 70 per cent year on year.

And on green finance in particular, London’s expertise is in high demand across the globe. London has maintained its top spot on the latest Global Green Finance Index (GGFI) which serves as a valuable measure of the development of green finance for policy and investment decision-makers.

But keeping our dominant position also relies on the government creating the right business environment for firms to invest, list and grow.

The recent Edinburgh reforms were a step in the right direction that will power growth across the City. The Financial Services and Markets Bill currently making its way through parliament can help us adopt fair and proportionate regulation.

The government must now look to adopting other growth measures in the here and now. Signing the mutual recognition deal with the Swiss government which aims to improve access to our respective markets, cutting compliance costs and boosting growth, could further consolidate London’s position as the world’s leading financial centre.

Urgently enacting Solvency II reforms could unlock more than £100bn in long-term productive finance. And directing capital into much needed infrastructure and sustainable projects will help get us a step closer to reaching our climate targets.

On this last point, tackling the climate challenge will require greater cooperation. So it’s welcome to see the recent mood music changing between the EU and UK. Seizing on this opportunity will help us move past the standstill.

London has many competitive strengths – from data to green finance – leaning into these, will help us ultimately retain our number one title.