The UK Economy
The City of London
How London became one of the world's top financial centres, what the City does, and the benefits and risks of a large financial sector.
The City of London, often just called “the City”, is one of the world’s leading financial centres, alongside New York.
What happens there
- Foreign exchange trading: London handles a large share of global currency trading.
- Insurance, including Lloyd’s of London.
- Banking, asset management and legal services.
- International bonds.
Why London
- Time zone bridging Asia and America.
- English law and language.
- History of global finance.
- Talent from around the world.
Economic importance
Financial and related services are a large share of UK exports and tax revenue.
Risks
- The 2008 financial crisis hit UK banks hard, requiring bailouts of Royal Bank of Scotland and Lloyds.
- Critics speak of a “finance curse”: a large financial sector can draw talent from other industries and increase inequality.
Brexit effect
Some jobs and activity moved to Dublin, Frankfurt, Paris and Amsterdam after Brexit, but London remained a leading centre.
Indian firms
Indian companies raise money in London through masala bonds, rupee-denominated bonds first issued there in 2016.
A trader in London swaps dollars for rupees for an Indian exporter while Asian and American markets are both open.
Financial and professional services dominate the City.
- London is a leading global financial centre.
- Time zone, law and talent explain its position.
- Finance is a big share of UK exports and taxes.
- 2008 bailouts and Brexit showed its risks.
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