How did London come to be the world’s greatest financial hub?

The City of London. Image: Getty.

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Ask anyone about powerful stock markets and financial hubs, and the conversation will likely turn to Wall Street. But in actual fact, London has been far more powerful than Wall Street – or any other financial hotspot – for many years. Up until the recent Brexit referendum, which saw Britain vote to leave the European Union, London was king when it came to business, stock trading and financial operations in general.

How did London surpass Wall Street as the world’s finance capital? Partly it was due to favourable legislation, and partly to good positioning. London’s time zone means that its business hours overlap those of the Middle East, America and Asia – something which definitely put the city in good stead when it came to trading.

That said, the key event in London’s rise as the world’s premier financial hub was probably legislation passed the “Big Bang” reforms passed by Margaret Thatcher’s government in 1986. These were intended to remove the laws that were protecting Britain’s slow-growing firms and contributing to sluggish financial markets.

The results were immediate. From a network of small companies with very little potential for growth, London-based businesses grew overnight to become conglomerates of huge proportions, along with more advanced financial practices like virtual banking.

Even better news for UK businesses lay ahead. The Big Bang had created relaxed regulatory measures that allowed corporations to earn unlimited amounts of money between the 1980s and the early 2000s. Helping London further, in 2002, the US Congress tightened corporate regulations through the Sarbanes-Oxley reforms, which increased paperwork and put a cap on the local earning opportunities.

So London’s stock markets flourished: American firms were forced to adhere to the Sarbanes-Oxley reforms, but other international markets simply sidestepped them by taking their business to London instead. It was through these actions that London finally bypassed Wall Street, becoming the world’s number one hotspot for trading and business ventures. Within a few years London had captured more than 75 per cent of the US exchange’s public stock, and Congress was trying to win them back through softer regulation.


The Brexit shockwave

London enjoyed its status as the world’s hub of finance for a few more years, but it was not to last. When the public voted for Brexit, London’s Stock Exchange plummeted, as companies and investors pulled out of Britain and moved their business to other European districts.

Brexit has had a huge impact on businesses in the UK, and a number of European cities that have the potential to replace London as the finance capital of Europe – and perhaps even the world – have stepped forward. Frankfurt, Paris, Madrid and Amsterdam are being touted as candidates, while many experts also theorise that Dublin’s technologically advanced approach may put them in the lead.

However, the glory days might not be over just yet for London. Some commentators have suggested that the British capital will continue to dominate European financial markets for a number of key reasons.

Firstly, the strength of the local courts means that the rule of law will continue to be upheld, including those that protect creditor and shareholders’ rights. Secondly, the UK’s university education offerings in economics and finance are far superior to those anywhere else in Europe. And lastly, the UK’s regulations controlling tax and employment is designed specifically to boost the financial industry’s overall health and profit margins.

There is no denying that trade has become more challenging in London since Brexit. Tax loopholes have been closed, and companies are expected to shell out more of their profits in the process. However, if London manages to keep its dominance over European financial markets, it stands to reason that the city may one day reclaim its title of the world’s greatest finance hub.

 
 
 
 

Does it matter that TfL are renaming White Hart Lane station Tottenham Hotspur?

New White Hart Lane. Image: Getty.

Pretend for a moment that you’re travelling in the London of 1932. You’re taking the Piccadilly Line northbound and alight at Gillespie Road station. The name should be obvious: it’s inscribed in bespoke brown tiling on the platform.

But that 31 October, following an intense campaign by the eponymous football club, the London County Council changed the station’s name to Arsenal (Highbury Hill). The area’s growing association with the name “Arsenal” ended in a lengthy negotiation that changed maps, signs and train tickets alike. Football had acquired so much power that it changed the name of not just a Tube station but an entire suburb, even before the era of Wenger or the Emirates.

Now the spectre of name changes is on the horizon once again. As Tottenham Hotspur FC inches closer to completing its new stadium, the club is clamouring for a renamed Overground station. Despite the fact the new stadium is located on almost exactly the same site as the old just off White Hart Lane, and fans have long been calling the scaffolding-laden mess “New White Hart Lane”, the club’s executive director is adamant that the station’s existing name cannot stand. White Hart Lane station, on the Overground line leaving Liverpool Street, is set to be renamed “Tottenham Hotspur”, at a cost to the club of £14.7m.

Little has been made of the fact that this peculiar PR kerfuffle is tied to Spurs’ failure to convince Nike to sponsor the venue. Some sources have even claimed that the sponsorship is yet to be finalised because it is somehow contingent on the renaming of the Overground station; beyond the ridiculous Johnson-era vanity project that was the Emirates Air Line, it seems improbable that TfL will allow any more corporate-flavoured information pollution. There will be no “Nike Stadium” station on the way to Enfield, much as there is no “Emirates” on the way to Cockfosters, especially if public consultation gets a look in.

The scene of the crime. Image: TfL.

But there’s a problem with the new name, all the same. “White Hart Lane” already means “football stadium”, in the same way Loftus Road or Stamford Bridge do. Changing it to “Tottenham Hotspur” risks opening the floodgates to an “O2 North Greenwich” or a “Virgin Euston” at some point in future, names as banal as there are dystopian. The Greater London Authority has promised to spend the £14.7m fee on community programmes in the local area – but that’s not much money to set the precedent that a private company can mess about with the Tube map.


What’s more, as CityMetric has often observed, there are plenty of station names across London that could do with a tidy up. Picking one that’s perfect already and asking for £14.7m to change it is adding insult to injury. How much would it cost a community group if they asked to change the name of Goodge Street to Fitzrovia? Why does a vast corporate entity backed by international sponsors and thousands of season ticket holders get to set the standard?

Back in Arsenal’s day, changing names on the Tube must have been easy; changes could be accommodated gradually without bothering the every day traveller. But in our world of online information, maps and apps, name changes are rather more complicated.

The question is – if TfL can bring itself to balefully accept this particular proposition, why can’t it accept ours? Why sort out a single non-issue on the Tube Map when you can catch lots of real ones in one go? A day’s pandemonium might just be a price worth paying to fix the Bethnal Greens problem once and for all.