SCOTLAND’S two biggest cities have slipped further down the rankings of a global financial centres index as the country struggles to overcome the damage to its reputation caused by the financial crisis.
Edinburgh’s fortunes as a world financial powerhouse have slumped dramatically since it was ranked number 15 on the inaugural Global Financial Centres Index (GFCI) in 2007. In the latest issue of the biannual report, it is now reduced to 37th on the list behind Copenhagen and Kuala Lumpur.
Glasgow’s influence in global finance has suffered a similar fate, although it didn’t have so far to decline. It fell eight points in the latest listing to be ranked 41, after making its debut at a high of 22 in the first half of 2008.
Ahead of Edinburgh are cities like Calgary, the financial centre of Canada’s tar sands oil fields, and which is a new entrant to the index at 28.
Other cities that have moved ahead include Amsterdam (33), Copenhagen (36), Dubai (29), Kuala Lumpur (35) and Vienna (34).
London maintained its pre-eminence at the top of the index, followed by New York, Hong Kong and Singapore. Tokyo knocked Shanghai from the number five spot, as cities in mainland China experienced decline.
Mark Yeandle, senior consultant for the report’s authors, Z/Yen, said the slippage seen for Edinburgh and Glasgow was “reputational”.
He said: “A lot of it is to do with the reputational damage which just hasn’t been regained yet. It took a hammering two years ago, and it is taking a long time frankly to overcome the reputational disadvantage.”
But Owen Kelly, chief executive of trade body Scottish Financial Enterprise, insisted that Scotland had held on to its “enduring strenghths”.
“We are seeing a growth in activity in many of leading sectors, notably asset servicing and asset management,” said Kelly. “The big story remains as it has been for the last few years, namely the rapid increase in the scale and influence of Asian financial centres.
“But Scotland’s enduring strengths – our skills, our long-term approach to investing and our international outlook – have ensured that the underlying scores for both Edinburgh and Glasgow remain steady. But the intensity of the competition is growing all the time.”
Kirk Murdoch, senior partner at law firm McGrigors, warned against complacency.
“Glasgow and Edinburgh are both fantastic cities with plenty going for them, but this survey demonstrates that we cannot be complacent in the face of global competition. It is stark that in a period of immense upheaval in the eurozone, Scottish cities have encountered steeper declines than others in Europe.”
“What this research highlights is the need to ensure that Scotland is seen as open for business. That means keeping the country attractive in terms of the tax and regulatory regimes for businesses and individuals, and also continuing to invest in economic infrastructure that will make it easy for global commerce to take place in and around Scotland.”
The latest survey ranked 77 financial centres – cities and regions – according to measures such as market access, infrastructure and competitiveness along with other factors.