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London is the world’s leading financial centre for international business and commerce and is one of the “command centres” for the global economy.
According to Brookings Institution, London has largest metropolitan economy in the world with an estimated per capita GVA of £116,800 ($162,200). By way of comparison, London’s economy is roughly the same size as that of Sweden or Iran.
With an estimated 8,615,246 residents in 2015, London is the most populous region, urban zone and metropolitan area in the United Kingdom. London generates approximately 22 per cent of the UK’s GDP. 841,000 private sector businesses were based in London at the start of 2013, more than in any other region or country in the UK. 18 per cent are in the professional, scientific and technical activities sector while 15 per cent are in the construction sector. Many of these are small and medium-sized enterprises.
Although London is home to numerous companies within the United Kingdom, statistics show how important it is to other nations. For example, the most recent data estimates that London exports approximately £92billion worth of products every year while its GDP is greater than the economy of Belgium.
London shifted to a mostly service-based economy earlier than other European cities, particularly following the Second World War. A number of factors contribute to London’s success as a service industry and business centre:
English being the native language and the dominant international language of business;
its position as the capital of the former British Empire;
its location within the European Union, since the EU has a population and GDP larger than the US;
the special relationship between the United Kingdom and United States, and the United Kingdom’s close relationships with many countries in Asia, Africa and the Middle East, particularly those in the Commonwealth of Nations;
its location in a central time zone that allows it to act as a bridge between US and Asian markets;
English contract law being the most important and most used contract law in international business;
relatively low taxes for corporations and non-domiciled foreign individuals;
a business friendly environment (e.g. in the City of London the local government is not elected by the resident population but instead by resident businesses the City of London is a business democracy);
good transport infrastructure particularly its aviation industry;
a high quality of life.
Currently, over 85% (3.2 million) of the employed population of greater London works in the service industries. Another half a million employees resident in Greater London work in manufacturing and construction, almost equally divided between both.
Domestic and international corporate headquarters
The London Stock Exchange is the most international stock exchange and the largest in Europe. More than half of the London Stock Exchange top 100 listed companies (the FTSE 100) and over 100 of Europe’s 500 largest companies are headquartered in central London. Over 70% of the FTSE 100 are located within London’s metropolitan area, and 75% of Fortune 500 companies have offices in London. According to research by Deloitte, “London has the most internationally diverse executive community in the world, attracting business leaders from 95 nationalities and with alumni working in 134 countries”.
London’s largest industry remains finance, it is the largest financial exporter in the world which makes a significant contribution to the UK’s balance of payments. The City of London is home to exchanges, banks, brokers, investment managers, pension funds, hedge funds, private equity firms, insurance companies and reinsurance markets. London is notable as a centre of international finance where foreign participants in financial markets come to deal with one another. It is also home to the Bank of England and the European Banking Authority.
A second financial district has developed at Canary Wharf to the east of the City, which includes the global headquarters of two of the world’s largest banks, HSBC and Barclays, the rest of the world headquarters of Citigroup and the headquarters of the global news service Reuters. London handled 36.7% of global currency transactions in 2009 an average daily turnover of US$1.85 trillion with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined. London is the leading centre for international bank lending, derivatives markets, money markets, and issuance of international debt securities.
Financial services in London benefits from the UK’s membership of the European Union. The position of London as a financial centre may be further enhanced by the EU-US Free Trade Agreement currently under negotiation.
Courtesy : Wikipedia