{"id":63970,"date":"2025-08-13T12:44:13","date_gmt":"2025-08-13T12:44:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/63970\/"},"modified":"2025-08-13T12:44:13","modified_gmt":"2025-08-13T12:44:13","slug":"is-londons-financial-future-evolving-or-eroding-cnbcs-uk-exchange-newsletter","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/63970\/","title":{"rendered":"Is London’s financial future evolving or eroding?: CNBC’s UK Exchange newsletter"},"content":{"rendered":"

This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe\u00a0here.<\/a><\/p>\n

The dispatch<\/p>\n

After several years\u00a0in the Big Apple, I knew my return to London would be a culture shock.<\/p>\n

Instead of Times Square with its skyscrapers and blinding lights, I would roam around Piccadilly Circus and its Victorian buildings; Dunkin Donuts on every major intersection would be replaced by Greggs on street corners, and I’d\u00a0be ordering a sausage roll instead of\u00a0a bagel for lunch.<\/p>\n

But beyond the trivial switch-ups, I was in for a bigger shock than I thought \u2014\u00a0on the economic front.<\/p>\n

Firstly, the cost of living,\u00a0from rent and\u00a0utilities\u00a0to\u00a0public transport,\u00a0has risen significantly.<\/p>\n

A return train ticket from London to my family home in\u00a0Norwich\u00a0is now\u00a0over 30% higher\u00a0\u2013 costing a whopping \u00a372, compared to the \u00a354 it used to cost me 8 years ago.<\/p>\n

It should perhaps not have been such a shock; the U.S. has, after all, experienced markedly lower inflation than the U.K. over recent years.<\/p>\n

More recently, prices in the U.K.\u00a0rose 3.6% in the year to June 2025<\/a>,\u00a0compared to a 2.7% increase in the U.S.\u00a0<\/a>The Bank of England\u00a0now\u00a0expects inflation to peak at 4% in September, only returning to its\u00a02% target by mid-2027.<\/p>\n

When I moved to New York, it was a year and a half after the Brexit referendum. All these years later, and Brexit continues to dominate discussions<\/a>.<\/p>\n

In conversations with CEOs and business leaders, I hear how Brexit still hamstrings the economy, particularly through trade barriers, increased border costs and reduced productivity compared to staying in the European Union.<\/p>\n

The skyline of London’s financial district.<\/p>\n

Leon Neal | Getty Images News | Getty Images<\/p>\n

Equally concerning is that London’s reputation as a leading global financial center is increasingly in question, as it struggles to compete with the likes of New York, Hong Kong and Frankfurt.<\/p>\n

Fundraising from initial public offerings in London, meanwhile, has tumbled to its lowest level in at least 30 years<\/a>, according to data from Dealogic, in a sign the\u00a0U.K.’s equity markets are losing their attractiveness.<\/p>\n

Bank of England Governor Andrew Bailey told me last week\u00a0<\/a>that business uncertainty in the\u00a0country\u00a0remains\u00a0very high, after I asked him about the effectiveness of interest rate cuts by the central bank.<\/p>\n

“There is a much higher level of uncertainty and given that many investment decisions are irreversible once we take them, the value of waiting therefore goes up, and that is what is happening,” he said.<\/p>\n

Another hot topic in London over recent months has been changes to the so-called non-dom tax rules<\/a> for wealthy foreigners.<\/p>\n

London’s property market <\/a>has been particularly impacted by the uncertainty, according to property website\u00a0RightMove, which cited confusion around the rules as one reason behind reduced demand from buyers\u00a0\u2014 both domestic and foreign \u2014 in the capital’s\u00a0housing market, as house asking prices fall.<\/p>\n

Reviving London as a financial hub<\/p>\n

Despite the challenges and setbacks, all is not lost. Business leaders\u00a0tell me\u00a0there is still hope and opportunity for London.<\/p>\n

While there are upside risks to inflation, the Bank of England cut\u00a0interest rates this month<\/a>.\u00a0The bank’s monetary policy committee\u00a0cited progress in disinflation in underlying domestic prices over the past couple of years, as core CPI and services inflation remain flat, while highlighting the reduction in wage growth.<\/p>\n

Lower\u00a0interest rates could help to spur consumption and investment, as well as help to get the property market back on track. More affordable\u00a0mortgages may ultimately allow for more parity between buyers and sellers in the second half of the year.\u00a0<\/p>\n

When it comes to Brexit, business investment in the U.K.\u00a0stalled after the vote to leave the bloc in 2016. However, there have been some signs\u00a0of recovery,\u00a0with a focus on specific sectors like technology and pharmaceuticals. The U.K.\u00a0has been seeking new trade deals outside of the EU, including\u00a0with Australia<\/a>, New Zealand<\/a> and India<\/a> \u2014 and of course, the U.S<\/a>.<\/p>\n

In fact, Britain’s\u00a0trade deal\u00a0with\u00a0President\u00a0Donald\u00a0Trump\u00a0\u2014 although worse than during his\u00a0first term\u00a0\u2014 is still better than the EU’s agreement\u00a0with the U.S.<\/p>\n

London-based chartered accountants and business advisors Lubbock Fine\u00a0noted that the U.K.’s substantial tariff advantage could benefit the country\u00a0as a manufacturing hub for EU companies, seeing them\u00a0relocate to the U.K.<\/p>\n

Yet, when it comes to\u00a0rebuilding London’s reputation as a powerhouse in financial services, there is more work to be done.<\/p>\n

Crucially, it will entail policymakers creating an environment that is conducive to doing business.<\/p>\n

In\u00a0my recent\u00a0conversation with Antony Jenkins, former Barclays CEO, he highlighted the need to drive access to capital for start-ups and minimize the cost of doing business.<\/p>\n

He\u00a0was\u00a0positive on the reforms that are being made to encourage more investment into the private sector and is interested in retargeting the R&D tax credit toward higher-growth businesses.\u00a0But ultimately, Jenkins says\u00a0there needs to be a bigger focus on growth policies to boost GDP per capita and attract entrepreneurial talent.<\/p>\n

“Let’s face it, there’s many attractive things about the U.K. We have market leadership around the world in things like financial services, technology, AI, the creative industries, and the U.K. is a great place to live, so we have all these strengths,” he said.<\/p>\n

“What we need to do is amp up the other things that will make this place more attractive for business.”<\/p>\n

\u2014 Ritika Gupta<\/p>\n

Top TV picks on CNBC\"Watch<\/p>\n

Andrew Bailey, governor of the Bank of England, discusses the central bank’s interest rate cut, inflation and the uncertainty surrounding future decisions on monetary policy.<\/p>\n

\"London<\/p>\n

CNBC’s Ritika takes a look at the capital’s housing market.<\/p>\n

\"England<\/p>\n

England Lionesses and Gotham FC’s Jess Carter tells CNBC’s Tania Bryer that social platforms “need to do better” to protect people online.<\/p>\n

\u2014 Holly Ellyatt<\/p>\n

Need to know<\/p>\n

Elon Musk’s Tesla launches bid to supply electricity to British households. The Texas-based company formally submitted its request for an electricity license<\/a> to the British energy regulator Ofgem at the end of last month.<\/p>\n

The government won’t admit it, but tax rises are coming \u2014 and there are no good options.\u00a0British Prime Minister Keir Starmer was asked about suggestions that tax rises would be necessary in autumn<\/a>, but said he did “not recognise” the figures. Nonetheless, he declined to rule out hiking VAT, income tax and corporation tax.<\/p>\n

Bank of England chief says no rift with UK government as Revolut licence delay draws scrutiny.\u00a0Authorizing Revolut as a fully licensed bank<\/a> has become an important issue for the U.K. government, particularly as key figures in the tech industry have challenged tax changes that affect the wealthy.<\/p>\n

\u2014 Holly Ellyatt<\/p>\n

In the markets<\/p>\n

The U.K’s FTSE 100<\/a> has had a muted week, slipping 0.1% over the past 7 days to end Tuesday at 9,147.81.<\/p>\n

After a jump in July (when it rose over 4%), the index seems to have put its feet up in August \u2014 much like many traders \u2014 following the uncertainty and accompanying market volatility surrounding Trump’s tariffs regime.<\/p>\n

Stock Chart IconStock chart icon\"hide<\/p>\n

The performance of the Financial Times Stock Exchange 100 Index over the past year.<\/p>\n

Sterling<\/a>, meanwhile, has risen against the dollar over the past week. It was trading over 0.6% higher at $1.3517 late Tuesday after U.K. jobs data \u2014 which showed a cooling of the U.K. jobs market, but strong wage growth \u2014 and U.S. inflation figures<\/a>, which sent the dollar lower.<\/p>\n

U.K. government bond yields have also ticked higher, with the 10-year yield<\/a> trading around 4.626% on Tuesday.<\/p>\n

\u2014 Katrina Bishop<\/p>\n

Coming Up<\/p>\n

Aug. 14: U.K. second-quarter GDP; trade balance data for June; RICS house prices for July<\/p>\n

Aug. 20: U.K. inflation data for July; retail price index for July<\/p>\n

\u2014 Holly Ellyatt<\/p>\n","protected":false},"excerpt":{"rendered":"This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe\u00a0here. The…\n","protected":false},"author":2,"featured_media":63971,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[2018,26795,84,273,1278,1294,2017,2016,2020,394,620,2015,186,2019,56,54,158,55],"class_list":{"0":"post-63970","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bae-systems-plc","9":"tag-british-10-year-gilt","10":"tag-business","11":"tag-business-news","12":"tag-economic-events","13":"tag-economy","14":"tag-fred-goodwin","15":"tag-ftse-100","16":"tag-gbp-usd","17":"tag-new-york","18":"tag-new-zealand","19":"tag-pound-sterling","20":"tag-prices","21":"tag-rolls-royce-holdings-plc","22":"tag-uk","23":"tag-united-kingdom","24":"tag-united-states","25":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/63970","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=63970"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/63970\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/63971"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=63970"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=63970"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=63970"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}