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London keeps No. 2 global ranking but loses ground due to Brexit

London remains the world's second-most competitive financial center, but confidence in the U.K. capital has slipped over the past six months, according to the latest Global Financial Centres Index.

The index compiled by the Z/Yen Group in cooperation with the China Development Institute is released twice a year, in March and September, and the latest survey features 104 major global financial centers.

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The latest index, its 26th installment, shows no change in the top five positions. New York, London, Hong Kong, Singapore and Shanghai led the list between March and September. However, all of the top five centers saw a drop in their ratings in the fall versus the spring edition of the index owing to the growing uncertainty around global trade, geopolitics and Brexit, the researchers said.

Among the top five, London's rating slipped the most since March, by 14 points to 773, leaving the U.K. capital 17 points behind New York and just 2 points ahead of third-ranked Hong Kong. London's second spot is at risk with worrying signs for the future as Asian and other European centers' strength increases, Professor Michael Mainelli, executive chairman of Z/Yen said in a Sept. 18 statement.

Paris, which has been among the main continental European financial centers to attract banks leaving London ahead of Brexit, gained 10 spots since March, now ranking 17th. "If London and Paris have similar falls and rises in the ratings in [the next edition of the index] GFCI 27, London would be reduced to a two-point lead over Paris and would lie behind Shanghai," the researchers said.

Brexit beneficiaries

"Respondents consider that New York, Hong Kong and Singapore will benefit substantially from Brexit. In Europe, Frankfurt is considered likely to benefit most, followed by Paris, Luxembourg, Zurich, and Dublin," the researchers said.

Paris' position has strengthened thanks to the strong involvement of public authorities in its consolidation as a leading financial center driven by the administration of President Emmanuel Macron.

The French capital is the only "global city" in the European Union, on a par with London. Paris benefits from "a complete ecosystem, including clients, talents and quality infrastructures, as well as from a regulation recognized at international level and a quality dialogue between regulators and market participants," the researchers said.

Dublin, which has been the destination of choice for more financial firms overall than any other European Union city after Brexit according to S&P Global Market Intelligence's own assessment, climbed 16 points in the GFCI 26 survey.

Performance across the latest GFCI 26 index showed a slight fall in confidence as overall ratings declined by some 2.5% from the previous index in March. The latest index was based on a combination of the assessments of 3,360 financial services professionals polled by the research groups, as well as quantitative data.

Thirty-one of the financial centers assessed recorded rating drops compared to six months ago. In terms of ranking, 12 of the featured centers rose 10 or more places, while another 10 fell by 10 or more places in the latest index.