For so long now, London has been one of the world’s most important banking centers. The axis of Europe’s business activity, more than 100 of Europe’s top 500 companies base London as their headquarters. Yet, the ongoing recession that is plaguing the U.K. is taking its toll. And times are changing. The world’s second-largest financial center may concede its place in the next 10 years to the new, confident, impatient city of Shanghai, according to a new survey by international law firm Eversheds.
That Shanghai is likely to emerge as one of the world’s leading global business hubs is not surprising, given China’s spiraling economic growth. But the pace of London’s decline is surprising. The government has imposed a hefty tax on bankers’ bonuses, which comes on top of a proposed 50% hike in income tax rates for high earners. Banks are unhappy, and although no bank has finalized plans to leave London as yet, the threat remains viable.
In October and November last year, London-based Eversheds interviewed around 600 business leaders for its survey from cities ranging from London to Mumbai, New York to Shanghai and the United Arab Emirates. A staggering 91% of the respondents in Shanghai felt confident about their business outlook over the next 10 years compared to just 22% in London. New York is expected to retain its place as the world’s business center despite the economic slump in the U.S. Eversheds commented in the report that the “high level of confidence in Shanghai” comes against a “backdrop of significant government stimulus to boost the economy.” That stimulus, of course, refers to the mammoth $586 billion package that the Chinese government introduced last year to curb fears of an economic slowdown. “Not only is confidence high within China, but it is also perceived as an important economic center on the world stage by senior business leaders around the globe,” the report added. If there was room for improvement, most of the Shanghai respondents wished for new regulations to protect business growth as well as a few tax incentives to promote business.
Shanghai has reason to feel good. The city plays host to the World Expo between May and October this year, and the Expo is estimated to draw around 77 million visitors, truly launching China’s business capital onto the world stage. The Expo’s theme of ‘Better City – Better Life’ is an apt catchphrase considering the changes the city has made from its days as a small fishing town in the 19th century. The city is ambitious, brash and confident, only matched by the city’s growth target of 8% this year, a figure that mirrors the country’s forecasted level of growth. As the Shanghai skyline lights up over the Pudong business district, it becomes clear that the ‘old economic order’ has changed, as Eversheds noted. Shanghai is set to become the new, rising star of the East, and London may just have to make way.
Postcards from Around the World
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