The value of Europe’s international financial centres to the EU economy
Today sees the release a new report, The Value of Europe’s International Financial Centres to the EU Economy, commissioned by us and the City of London Corporation on behalf of the International Regulatory Strategy Group (IRSG). Focussing primarily on eight major international financial centres – Amsterdam, Dublin, Frankfurt, London, Luxembourg, Madrid, Milan and Paris – it suggests that clustering of European financial centres, and the networking between them, delivers significant and tangible social and economic benefits throughout the European Union.
Our Chairman, Stuart Popham, commented:
“In response to the global financial crisis, European policy-makers – along with domestic governments and international organisations – are currently restructuring the framework in which the European financial services industry operates.
The benefits that Europe’s international financial centres bring to Member States’ economies are clear to see – new regulations should be accompanied by comprehensive impact assessments to ensure that we do not damage Europe’s international competitiveness.
These benefits – accrued directly as a result of the cluster of international financial centres – underpin the Europe 2020 strategy and highlight the opportunity for the EU to be the pre-eminent location for financial and professional services firms for years to come.”
Policy Chairman at the City of London Corporation, Stuart Fraser, added:
“This report clearly shows that having a cluster of genuinely international financial centres within the EU provides significant benefits not only for the countries in which they are located but also for individuals, companies and governments across all 27 Member States.
“The 8 largest financial centres in the EU account for the bulk of its financial services provision and provide a unique advantage in the global marketplace.
“They offer access to a depth and concentration of capital, talent, markets and services required to compete in the global marketplace and promote specialisation in other business sectors and geographic regions.”
Whilst the tax and employment benefits that a successful financial services industry can generate are often cited, this report, authored by Europe Economics, shows that individuals and households across the EU also benefit from lower costs through cross border competition for products and services, improved financial security for individuals and economic stability for governments.
With wage growth over the average lifetime of 2 per cent, a well-functioning financial sector can add around 5 per cent to GDP from savings-and-borrowing effects alone. With this figure rising to 8 per cent if income growth is 2.5 per cent, it is clear that financial services have a vital role to play in contributing to and supporting a faster growing EU economy.
The breadth and depth of the EU’s financial services industry provides access to capital for businesses in all industry sectors, encouraging trade-led growth and investment across all EU countries. With some €280bn raised through IPOs on European stock exchanges between 2002 and 2010, businesses have been able to flourish by investing in core areas such as research and development and merger and acquisition activity.
