To be checked against delivery
Thank you, Miles, and good morning, everyone.
It’s a great pleasure to welcome you all to TheCityUK’s International Conference.
I’d like to start by thanking our sponsors Freshfields, HSBC and State Street, as well as our superb group of speakers and panellists for donating their time today.
We have a line up that brings enviable experience and insights and I encourage everyone here to ask them incisive questions when the chance arises, although they might not thank me for saying that.
This may be only our second international conference, but it is already very clear that it will become an increasingly important fixture in the calendar.
It’s an important opportunity to reflect on the UK’s role as a global financial centre in a volatile world.
I think quite a lot of us have felt for some time like everything everywhere has been happening all at once.
Many of us, no doubt, will sympathise with Henry Kissinger who once said: “There can’t be a crisis next week, my schedule is already full.”1
And we may well face a few more weeks, months, and perhaps years, of full schedules and uncertain times.
Geopolitical divisions are hardening, intensifying the headwinds against cross-border investment.
So, we will need to advocate strongly for free and fair trade and work to find common ground and areas of mutual benefit from cooperation.
Building a sustainable future is perhaps the greatest of these and some good progress has been made.
At TheCityUK, we have been encouraging bilateral discussions on FTAs and MOUs with key markets.
But some challenges, like climate change, are global in nature and require an international response. As we all know, CO2 respects no borders.
In these areas, we must ensure coordination and cooperation in the development of standards for all.
It is in this context that we will have to consider how best to position ourselves for the future.
Global competition has always been fierce and it is only going to get fiercer.
When we study other growing financial centres, we see systematic efforts to join up the policies and priorities of government, regulation and industry. These are often underpinned by a clear sense of long-term policy objectives and ambitions.
So, we have a chance, now, to re-evaluate our place in the world and respond with a coherent approach.
For this we need an ambitious international strategy, that both builds on our strengths and develops new ones. I am pleased to say that TheCityUK, working with members and partners, launched precisely such a plan last year.
So today I’d like to highlight four of the many opportunities we can focus on against the current international backdrop.
First, as I have already mentioned, sustainable finance is an area where we can continue to build our strength.
Green loans, bonds and investments form the capstone to global measures to combat climate change.
The UK has already built up a high level of expertise, but we have the chance to create a truly global hub as expansion in green finance accelerates.
The global volume of green loans increased by nearly 200 times in the four years to 2021 and annual green bond issuance has risen exponentially over the past decade.5
Second, as global risks show no sign of diminishing around the world, the UK can build on its hard-won reputation as a centre for risk management, mitigation and advice.
UK capital markets should further develop instruments such as catastrophe bonds, insurance-linked securities, and weather derivative contracts, attracting further capital to the London risk market.
We must also press other countries to remove limits to international risk transfer.
The result will be to drive more insurance and reinsurance business into the global market.
And, by spreading risk across borders and instruments, that market will become larger, more liquid and more resilient.
Another opportunity is to attract international investment through Islamic finance offerings.
This is a core strength where we lead much of the western world.
UK-based Islamic finance banking assets make up more than 80 percent of the European total.2
Meanwhile, the London Stock Exchange has become a global hub for sukuk listings.
Our latest research shows that sixty eight sukuks are currently listed, with over $50 billion dollars raised.3
Global Islamic banking assets grew by more than 1 trillion dollars between 2016 and 2021 and are forecast to grow by another 1.2 trillion dollars by 2026.4
And finally, technology and digitalisation.
The UK is host to the second largest fintech cluster in the world, behind only the US, and it is home for an enviable pool of world-class talent.
However, both talent and technology are famously mobile.
The right training, mobility and tax regimes will incentivise research, development and innovation.
To stay ahead of the competition, the UK must remain a place where the world wants to come and work.
It must also ensure it remains an attractive destination for international investment – which is the focus of the report we’ve launched today with Freshfields Bruckhaus Deringer.
These are the battlegrounds of international competitiveness.
It is crucial that we fight hard on them and, most importantly, that we win that contest.
Because our international standing is central to the national economy.
The financial and related professional services industry contributes 12 per cent of the UK’s total economic output, and with 43%of industry exports originating outside London, it is truly a national industry.6
It provides nearly 2.5 million jobs right across the country, generating a trade surplus larger than that of all other net exporting industries combined.7
To conclude, in a world of accelerating change, there will be things we can control and things we can’t.
Telling one from the other will help us make these strategic decisions faster and more effectively.
There is no doubt that external conditions will have a hand in shaping the development of global financial centres.
But internal factors – what we can do right now to boost the competitiveness, openness and attractiveness of the UK as a financial centre – are within our power to improve.
This will require a greater measure of alignment across the various decision-making bodies and good collaboration between government, regulators and industry, but a clear and coherent approach will lead to improved confidence in the UK’s future.
And when the world has confidence in what you’re doing, you’re more competitive and more attractive to global capital and global talent.
Even if the uncertainty keeps returning week after week.
So, thank you again for taking part in our discussion today.
I’ll now hand over to Ian Stuart, CEO of HSBC UK, who has the difficult task of condensing his 40 years of banking experience into just a few minutes.
Notes:
1: New York Times Magazine, 1 June 1969.
2: Islamic finance: global trends and the UK market 2022, TheCityUK report, 24 Nov 2022
3: Ibid
4: Ibid
5: Green finance: a quantitative assessment of market trends, TheCItyUK report, 31 March 2022
6: TheCityUK briefing document
7: Ibid
