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How important is the City?
Posted on March 9, 2007 by Richard Beddard
Filed Under Investing, Ramblings |
I was reminded of Guy Fraser-Sampson’s claim that discouraging private equity could knock 1% off UK GDP when I saw this map:
Source: Worldmapper © Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan)
It’s the world, but not as we know it. Normally the area of a territory on a map is related in some way to its land area. Geographers at Worldmapper.org have resized the territories to show other variables, from population to pollution. The massively bloated pink territory at the top of the map is the UK. It shows our commanding position in mercantile and business exports. It looks to me like we are the biggest net exporter of services like: opinion polling, communications, accountancy, waste treatment, management consultancy, and government service in consulates and military units.
But if you think that’s impressive, take a look at this:
Source: Worldmapper © Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan)
This one shows finance and insurance exports. Yes, that big pink blob is the UK. But, lest we get lulled into thinking that once gain the sun may never set on the empire, let’s take a look at a manufacturing industry, toys:
Source: Worldmapper © Copyright 2006 SASI Group (University of Sheffield) and Mark Newman (University of Michigan)
It’s fair to say we’re not the toy manufacturing powerhouse we once were; the UK is a skeletal arachnid clinging onto the fringe of Europe. We’re just as bad at making clothes and cars and frankly it’s difficult to say for chemicals and machinery, so contorted is the map.
Love the City or lothe it, you can’t ignore it. Because its public face is the London stockmarket and we all know Tokyo and New York have much bigger domestic markets, it’s often forgotten how important the City is in international finance. I plucked these figures showing the UK’s share of various markets from The City: Inside The Great Expectation Machine, by Tony Golding:
- Cross border bank lending: 20%
- Foreign equities turnover: 48%
- Foreign exchange dealing: 31%
- Derivatives turnover (exchange traded): 8%
- Derivatives turnover (over-the-counter): 36%
- Marine insurance (net premium income): 19%
- Aviation insurance (net premium income): 31%
- International bonds (primary market): 60%
- International bonds (secondary market): 70%
The City of London website has more up to date figures.
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