Warsaw and Stockholm to be biggest threats to the City of London
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London has seen off challenges from Frankfurt and Paris, but two other booming financial centers are a bigger threat, says Matthew Lynn from Money Week magazine. He means Warsaw and Stockholm. Sweden has more than 1,000 listed companies, more than either Paris or Frankfurt, while Warsaw has 770, only 35 below Paris. Both are some way behind London, which has more than 2,000 listed companies, but they are gaining fast.
“Warsaw is building on the strength of the Polish economy. Annualized growth of more than 4% a year is steadily turning Poland into one of the richer countries on the continent (its stock market is one of the world’s few remaining bargains, but that is a different story). That is throwing up lots of growing businesses, some of which are ready to float. At least 20 companies are expected to list on the main market this year, and another 16 at least on NewConnect, its version of Aim. But it is also starting to attract global companies as well. Pepco, the owner of discount retailer Poundland, also has a big business in Poland and it decided to list in Warsaw earlier this year, rather than London,” the weekly wrote.
Warsaw and Stockholm have four things going for them. Both are outside the single currency, but inside the EU, just as Britain was before we left. That means they have their own central bank which can help the finance sector when it needs to, and they have their own domestic bond market. Next, they have thriving entrepreneurial economies to tap into. An emerging market such as Poland is always going to have a lot more energy than a mature, developed one. That means a steady stream of companies coming to the market. Thirdly, they have competitive tax systems. Poland has no capital gains tax, and just levies the standard corporate tax rate of 19 percent on gains, while Sweden is a lot more competitive than it used to be. And finally, both are inside the single market. Brokers and asset managers based in either city have full access to financial markets across the continent whilst preserving some flexibility and independence. The UK has lost that, and there is little chance of getting it now.
