Europe only accounts for two of the world’s top 10 financial centers, compared to five for the US. But how do European cities compare to one another?
European cities are vying with each other to become strong financial hubs in the quickly changing global finance landscape. This is an appealing distinction that can attract significant investment from corporate executives and increased scrutiny from policymakers.
Seven European cities are among the top 20 financial hubs in the world according to a recent Global Financial Centres Index (GFCI) ranking.
London remains the leader in Europe, even though the US controls the top of the list, with New York at the top.
It is presently ranked second globally, narrowly ahead of Singapore and Hong Kong in third and fourth place, respectively, but has closed the gap on the Big Apple relative to the previous rankings.
What characteristics distinguish a city as a competitive financial center and how do other European cities fare in comparison?
The only other European city to rank among the top 10 alongside the British capital is Geneva, Switzerland.
According to the GFCI, Geneva has outperformed its financial competitors over the past year, moving up from 23rd to 10th place with a 29-point rating increase.
The Swiss city is only five points behind San Francisco, which is in fifth place.
Analysts cite Switzerland’s low levels of corruption and regulatory environment as major benefits for the financial stability of its cities.
The European Central Bank’s home city of Frankfurt has displaced Paris as the third-best European city in the most recent report.
Frankfurt, also referred to as the “City of the Euro,” is home to the Bundesbank, the German central bank.
In the GFCI, Paris dropped from 14th to 15th place worldwide, while the German financial center moved up from 17th to 14th. But their difference in ratings is just one point.
Frankfurt is one of the fifteen cities whose importance poll respondents anticipate increasing.
The final three European cities in the top 20 are Amsterdam (19th), Zurich (18th), and Luxembourg (16th).
When examining the rankings on a country-by-country basis, Germany is the most powerful country in Europe.
Germany has five cities in the global top 50 list, more than any other European nation, even though none of them are in the top 10.
In addition to Frankfurt, Munich fell from 18th to 26th place, and Berlin moved up from 26th to 23rd.
Hamburg dropped from 43rd to 49th place, while Stuttgart moved up marginally from 47th to 46th.
Lugano is ranked 47th in Switzerland, the European country with the second-most cities included in the top 50. Edinburgh ranks 34th out of the two cities in the UK.
Other European cities included in the top 50 are Dublin, Ireland (ranked 25th), Stockholm, Sweden (ranked 40th), Oslo, Norway (ranked 42nd), Milan, Italy (ranked 45th), Madrid, Spain (ranked 48th), and Helsinki, Finland (ranked 50th).
The close grouping of their individual scores indicates potential modifications for the upcoming GFCI report.
The British Crown Dependencies are included, but there is a clear east-west split.
The three British Crown Dependencies, each ranking in the top 60, are also noteworthy. The Isle of Man, Jersey, and Guernsey are placed 52nd, 58th, and 59th, respectively. They are autonomous territories under the British Crown, not a part of the United Kingdom.
Europe is clearly divided into East and West according to the GFCI, which divides the continent into two groups: Western Europe and Eastern Europe and Central Asia.
The Western Europe group includes all of Europe’s top financial centers up to the sixty-first spot on the list.
Astana, the capital of Kazakhstan, is placed 60th overall and first among the cities in the Eastern Europe and Central Asia region. Next up is Tallinn at 87th, followed by Prague at 79th.
The US performed well outside of Europe, with five financial centers ranking in the top 10, demonstrating the strength of the US economy. Among the top 20 were prominent Chinese centers.
As per the GFCI 34, a noteworthy association exists between a city’s financial competitiveness and its business environment and reputation.
According to the report, there is a correlation between the Corruption Perception Index and the Economic Freedom of the World Index. Specifically, a city’s rating as a financial center increases when its economic freedom increases and its corruption perception decreases.
The competitiveness of financial centers is also significantly influenced by a city’s branding.
According to analysts, a city’s reputation for safety, stability, cultural offerings, and overall quality of life can attract investors, professionals, and businesses.
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