My Lords, according to the Global Financial Centres Index, London is the second highest-ranked financial centre in the world after New York, while Paris is 10th. The UK continues to be the pre-eminent financial centre for derivatives and foreign exchange trading. In all equities instruments, the UK almost doubles France’s total market capitalisation at $6.2 trillion. To support the UK’s competitiveness, the Government are undertaking ambitious reforms to keep pace with innovation.
My Lords, I totally accept that there are various people trying to analyse the levels of trading—although it was a wake-up call last year when on some grounds Amsterdam was seen to overtake London as the premier financial trading centre, and last week some of those organisations claimed that Paris had overtaken London as the premier stock exchange. In the light of us trying to build an economy which properly rewards our workers and protects our environment, what are His Majesty’s Government doing to increase confidence in London’s reputation in financial trading and as the premier stock market?
I am so glad that the right reverend Prelate has given me a chance to set out what the Government are doing. The Financial Services and Markets Bill has just completed its work in Commons Committee, setting forward a whole range of reforms to inherited EU law to make us more competitive. He also mentioned the environment. The Government’s ambition is to make London the premier place for green finance, to ensure that our financial markets take into account the challenge of climate change, so that we then can ensure that we are pursuing green growth across the whole of our economy.
My Lords, having lived and worshipped for nearly 40 years in the diocese of the right reverend Prelate the Bishop of St Albans, I have benefited greatly over the years from the spiritual advice that I have received from his predecessors and my local clergy. But is my noble friend aware that this is the first time I have ever heard a bishop of the Church of England complain that the stock market is not high enough? Is that because the bishops have ceased to worry about spreading Christianity and now propose the worship of Mammon, or is it simply a delayed anti-Brexit point, which is not the role of the bishops?
I cannot speak for the right reverend Prelate but he mentioned two things. One was ensuring green growth, which I have addressed, and the other was workers and jobs. Maybe he knows that there are 2.3 million jobs supported by the financial services sector, with two-thirds of these outside London in finance hubs including Birmingham.
My Lords, what is the Government’s considered view on which provides the greatest pressure on the standing of London as a financial centre: Brexit, or the chaos and instability caused by the last Conservative Government?
My Lords, I do not accept the premise of the noble Lord’s question, which he may be unsurprised to hear. In fact, in 2021, over 120 companies chose to list in London, the highest number since 2014 and ahead of its European competitors. These listings raised a total of £17 billion, the most raised in 15 years.
My Lords, I am sure that the noble Baroness must accept that in 2015 the value of the London Stock Exchange was twice that of the French stock exchange, and today it is lower. Will she also accept that there could be a number of reasons for this? First, it could be, as the Governor of the Bank of England said this week, that the markets have lost confidence across the board in the UK economy. Secondly, could it be because of the damage to the economy that the previous Prime Minister did in her 44 days? Thirdly, could this be—whatever the noble Lord, Lord Lilley, might think—a result of Brexit, as the Times said today? Or does she agree that it is all three?
I think the noble Lord forgot to mention a global pandemic and Putin’s war in Ukraine. He also forgot to acknowledge the point that I have made throughout this Question that London continues to be either the highest or second highest-ranking financial centre in the world.
My Lords, obviously we cannot be complacent, but can the Minister remind the House that Paris has 795 listed companies on its exchange, whereas London has 2,484 companies. We should look not just at the most valuable companies, such as LVMH, which is quoted in Paris and has a market capital of over €300 billion, but at all those small companies that are raising capital on the London market.
I think my noble friend has reminded the House on my behalf of those figures. I take the opportunity to say that we are not complacent about London’s position, and we are doing a lot of work beyond the Financial Services and Markets Bill to ensure that it remains competitive—the listings review from the noble Lord, Lord Hill, the second capital raising review and the wholesale markets review, among other pieces of work. The FCA has already delivered a number of rule changes based on the listings review to ensure that we remain competitive.
The noble Lord will know that risks come alongside being a premier financial centre. The important thing is that we take action to address those risks. That is what the Government have been doing and will continue to do. We had part one of the economic crime Bill in the previous Session and part two will be forthcoming.
The noble Lord is right in one respect: both the rest of Europe and the UK face heightened energy prices as a result of the war in Ukraine, and jurisdictions such as the US do not face equal pressures. But the UK also faces a tightness in its labour market that we see in the US, for example, that is not seen in other European countries. Factors have come together to make things harder for the UK in the current circumstances.