2023-Public-Sector-Perspectives

What matters most? Our research and experience highlight two critical factors that determine the success (or failure) of an IFC over the long-term. • First and foremost is an independent judiciary and a robust and independent regulator(s). • Second, is the attractiveness of the center, so that workers and their families want to live there. Quality educational institutions for the expatriate community is more important for attracting talent than almost any other factor. If families cannot get their children into the schools they want, the workers will simply not relocate. As a search firm once commented, “Everything is negotiable except the children’s education…” IFCs today Globally Over the past 15 years, the IFC landscape has changed. According to Global Financial Centres Index (GFCI) reports, New York, London, Hong Kong and Singapore have consistently been the world’s top four IFCs given their well-rounded infrastructure and services. Tokyo was a competitive IFC during the 2010s with a global ranking of fifth or sixth but has been gradually overtaken by rising stars including Shanghai and San Francisco. Figure 1: Ranking of select top IFCs 0 2 4 6 8 10 12 14 16 Tokyo London Singapore Hong Kong New York 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 16 14 12 10 8 6 4 2 0 Tokyo London Singapore Hong Kong New York 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Source: GFCI Index Report 1 to 32 North America New York has been the top financial center in the US since pre-colonial times. The city is strongly competitive in all five criteria that define a successful IFC. It is expected to remain one of the most attractive cities to live and work in the foreseeable future due to the scale, connectivity, breadth and depth of its financial markets. The West-Coast-based cities of San Francisco and Los Angeles are on a rising trend. The former possesses strengths in technology and fintech development and provides high quality professional services. The latter has solid infrastructure and competent human capital. Figure 2: Ranking of select North America IFCs 0 5 10 15 20 25 30 35 40 45 Los Angeles San Francisco New York 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 50 45 40 35 30 25 20 15 10 5 0 Los Angeles San Francisco New York 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Source: GFCI Index Report 1 to 32 Europe The landscape in Europe is competitive and sophisticated. London remains the primary center but may lose some of its dominance to other European cities due to Brexit. According to EY, 44% of the largest UK financial services firms have plans to move some of their UK-based operations to EU while £1.3 trillion worth of assets are estimated to have been shifted from the UK to the EU. 2 Nonetheless, this trend has recently stabilized, and more jobs remain in the UK than originally expected. Other financial centers that could come into play include Paris, the second highest ranked IFC in Europe after London, and the 11th highest ranked IFC globally, Frankfurt, Amsterdam, Dublin and Luxembourg. Figure 3: Ranking of select Europe IFCs 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 Luxe bourg Dublin Frankfurt Amsterdam Paris London 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 Luxembourg Dublin Frankfurt Amsterdam Paris London 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Source: GFCI Index Report 1 to 32 2 https://www.ey.com/en_uk/news/2022/03/ey-financial-services-brexit-tracker-movement-within-uk-financial-services-sector-stabilises-five-years-on-from-article-50-trigger Citi Perspectives for the Public Sector 17