The City of London – UK powerhouse
Over the past few months the global financial economy has entered uncharted territory. It is during this period that I entered my year in office as the Lord Mayor of the City of London writes Ian Luder, Lord Mayor of the City of London.
The reputation of the European and American financial services industry has come under strain and the financial turmoil which started in Western markets has threatened to engulf the world’s economies.
The world’s reaction to this global crisis is no different from that of anyone faced with a problem which seems to be of overwhelming proportions? First denial, then recognition, analysis, reform and reconstruction. I understand the feelings of anger, bewilderment and betrayal – but we need to move on with reform and reconstruction. The various fiscal stimuli began the process, but they take time to work through. For the person on the street anywhere in the world, the recovery phase began in earnest with the London Summit in April.
As the Lord Mayor of the City and Head of the City of London Corporation my job is to fight for the “City”, not just London but all financial and business services based in the UK. I will spend around 90 days abroad this year in some 23 countries. The destinations are determined after consultation with businesses, the Foreign and Commonwealth Office and UK Trade and Investment and they are some of the countries that offer the greatest potential for City businesses. I will also make about 800 speeches to senior business and government figures aimed at reinforcing the City’s world-leading position in international finance and business services.
On these overseas visits, my message is that the City of London is about far more than just banks. Financial services as an industry covers areas that range from carbon trading to accountancy and from the legal profession to maritime services. The UK financial services sector is working, well-regulated, professional and remains capable of considerable growth. Indeed, London and the sector’s strength is its broad base. For example, bond issuance for well-rated issuers was at record levels for the first three months of this year – and will have almost equalled levels for the whole of 2008. Additionally, fully underwritten new equity issues in excess of £16bn have been raised through the City in the first quarter, led by HSBC and the four great property companies – all with take up of between 94 and 98%.
The G20 summit reflected that the world of commerce is changing radically as the giant nations of Brazil, Russia, India and China (also known as the BRIC countries) take their place on the world stage. Their economic significances have also been reflected in the number of visits by my predecessors and also by the City representation established in India and China. The BRIC countries are high priority and will be key elements of my overseas programme this year. They will play a crucial role in the post-crisis world. In fact, even before the crisis struck, the balance of the global economy was shifting. This was not to one particular centre - but in a gradual eastward direction.
The best way to compete is to engage and the best way to take advantage of the changing global landscape is to deepen contacts with these newly-emerging nations. We have to take relationships beyond the one-way and the speculative and develop long-term two-way partnerships. By working together at many levels we can both increase the size of the overall financial services 'pie' and share the benefits.
Accompanied by a City business team representing a broad range of City interests, including banking, insurance, asset management and the legal profession, I will urge politicians across the world to look beyond nationalistic, protectionist solutions and remain committed to open and free economies – albeit well regulated – and work to turn the global financial crisis into a global opportunity.
One of the visits already undertaken was an 11 day programme visiting the United Arab Emirates, Qatar and Saudi Arabia. Some business representatives were regular visitors to the area while others were there for the first time to look at business prospects.
We held meetings with heads of state, governors of central banks and heads of regulatory authorities and network with leading business figures and members of the British business community in these overseas locations. These are set up thanks to the efforts of the British Ambassadors in these countries and their teams.
For example, in Saudi Arabia I was encouraged to see plans for a diversification from oil and gas and for large scale infrastructure investments. The government there will spend more than $400bn over the next four years on health, education, transport, power and water – which offers significant opportunities for British exporters and for consultancy and project management services and for mobilising finance.
In keeping with the promotion of UK-based financial services, my domestic visits programme this year has included Liverpool, Manchester, Edinburgh and Glasgow. In each I met senior political and industry representatives to discuss their issues so I can best represent them abroad and encourage them to join the overseas visits team (the visit to China later this year will include delegates from Liverpool representing its maritime industry). I also welcome foreign heads of state, ministers, central bank governors and senior business leaders, enabling them to meet key people from the City. We have hosted inward financial services missions involving presidents, prime ministers or finance ministers from Brunei, China, Hong Kong, Ireland, Israel, Korea, Malaysia, Mexico, Oman and Russia, and Thailand.
It is worth rehearsing the depth and breadth of London’s financial services sector which contributed £43.3billion to UK’s trade surplus in 2008. The financial and professional business services sectors together account for over 11% of the UK’s GDP. For example, $1359bn of foreign exchange is turned over each day in London (a 34% share of the global market), while 44% of the global foreign equity market is based here. 70% of all Eurobonds are traded in London while metal trading adds up to $2,000bn per annum. London is a leading centre for international legal services and international dispute resolution. Over 10,000 such disputes were resolved here. London is also a major international market for accounting and related services generating net exports of £1012m in 2007.
More than 20% of international bank lending is arranged in the UK (making it the largest single market) and £1.5 trillion in pension fund assets are under management in the UK (the third largest in the world) while the daily turnover in 'over-the-counter' derivatives is $643bn (42.6% of global share). There are 250 foreign banks in London and over 300 foreign companies listed on the London Stock Exchange (LSE), while 75% of Fortune 500 Companies have London offices.
Given the financial focus, a key theme for my year is financial literacy – both in the UK and abroad. I am working to promote this theme through livery companies and other organisations as a way of challenging poverty. Providing personal finance education in schools is the best way of embedding a basic understanding of financial matters in young people, because they are most receptive to learning.
This also links with promoting the City of London as a centre of learning and with the Mansion House Scholarship Scheme which offers high calibre candidates the chance of a placement within industry as an extension of their studies.
This year the theme of my Mayoral charity appeal is ‘building lives, saving lives’, a theme which I feel embraces the very essence of the two principal charities I have chosen to benefit from the funds raised by the Appeal – The Lord’s Taverners and St John Ambulance London (Prince of Wales’s) District.
One of my key philosophies is to help encourage and develop future generations, and, in their different ways, both charities exemplify this.
The Lord’s Taverners do incredible work to raise money for disadvantaged young people to have the chance to enjoy sport and other leisure activities. From their specially adapted minibuses to sporting equipment for inner city youngsters they are passionate about bringing the joy of sport and leisure into the lives of children who wouldn’t otherwise have the chance to join in such activities.
St John Ambulance is a charity so often taken for granted. Their uniformed first aider volunteers are quietly present at events at sporting and concert venues in London and around the country, including the London Marathon and The Lord Mayor’s Show, looking after the welfare and safety of everyone. They are the working partner of The London Ambulance Service and also have a thriving Cadets and Badgers youth membership programme for young volunteers.
This year sees the 800th anniversary of the completion of the first stone London Bridge. The Bridge has stood for 622 years and has witnessed many momentous events in our City’s history.
To celebrate this occasion the Appeal, in conjunction with the City’s Livery Companies and other interested organisations, is organising a free celebratory Medieval Fayre on London Bridge. Commemorative programmes in aid of the Appeal will be sold and I very much hope that you will be able to support me in ‘building lives, saving lives’. I look forward to seeing you at London Bridge on 11th July.
As you can see the role of the Lord Mayor is broad and varied. Promotion at home and abroad is crucial but to ensure that the City remains to be a global centre of financial and related services – we have to be excellent in all that we offer. That’s a job for all of us – not just Lord Mayors.
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