Financial Times, 20 November 2001
Frankfurt fails to steal London's crown as financial capital Financial Times
By Vincent Boland/Capital Market Editor
London's position as Europe's pre-eminent financial centre is unchallenged, in spite of the introduction of the euro and the growth of Frankfurt as a eurozone financial marketplace, according to a joint Anglo/German study of the rival cities.
Although there was "overwhelming" belief in Germany that Frankfurt's position was strengthening because of the euro and the size of the German economy, the study found "that the changes are not as strong as expected, and that there is no threat whatsoever to London's financial hegemony at this point in time".
The study was published yesterday by the Anglo-German Foundation for the Study of Industrial Society and written by academics from Loughborough and Heidelberg universities. It offers a glimpse from both sides of the debate into the merits of London and Frankfurt as financial centres, and more broadly as "world cities".
One of the report's most striking conclusions is that the euro had not altered the two cities' standing, even though the European Central Bank is in Frankfurt, while the UK remains outside the eurozone.
"We had begun by assuming that the euro would have been more significant (in changing the dynamic of the relations between the two cities) but it came across very strongly from both London and Frankfurt that it was not an important issue at all," said Kathryn Pain, senior research associate at Loughborough University, one of the study's authors.
The City had retained its dominant position as Europe's leading centre for banking, capital markets, advertising, the law and management consultancy. London was the "most connected world city" through its global service firm offices, ahead of New York, with Frankfurt in 15th place. But London was the only UK city in the top 100 "world cities" whereas there were seven German cities on the list.
There had, if anything, been more co-operation than competition between London and Frankfurt in the past few years, the study suggested. This was the case especially in the legal profession, where a series of UK/ German mergers had allowed London's global firms access to a big and growing local market and given German firms access to global know-how.
London's congestion and the poor state of its transport network were the biggest threats to its competitiveness.
Frankfurt's biggest problem was the difficulty of recruiting people to work there because of its "dull" image.
© 2002 Financial Times Limited