2.3 London: International financial centre

2.3 London: international financial centre
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Slide 1: Tekstslide
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2.3 London: international financial centre

Slide 1 - Tekstslide

Learning objectives
After studying this section, you will be able to:
  • Explain how London became a financial centre;
  • Describe the characteristics and functions of a financial centre.

Slide 2 - Tekstslide

Slide 3 - Video

Organic growth or planned growth?

Slide 4 - Tekstslide

London: international financial centre (C)
London is a financial centre (= A city with a strong focus on trade and the exchange of capital) of global importance.

The city has a service-based economy = An economy where the tertiary sector is the most important sector (see the next slide).

Number of universities > highly educated population.


Slide 5 - Tekstslide

Slide 6 - Tekstslide

London: international financial centre (C)
In London are a lot of financial institutions = Companies that provide loans, insurance and investment assistance.

How was it possible for London to gain such global importance?

Slide 7 - Tekstslide

Reasons for becoming a financial centre (D)
  1. Cultural reason: English is the most important language for verbal communication in international business.
  2. Geographical reason: London’s favourable geographical location in the world. It's a bridge between the US, Europe and Asian markets.
  3. Historical reason: London was once the centre of an empire that stretched all the way around the globe. 
  4. Political reason: Business-friendly environment in the CBD. Taxes for companies are kept low by the UK government, making it an attractive place for companies to be located. Furthermore, the infrastructure of the city is known to work well. Especially good is the access to aviation routes, with five airports located within easy reach of the city. There is also a direct train connection to France.

Slide 8 - Tekstslide

The City, London’s financial heart.

Slide 9 - Tekstslide

Talking point :  There are several cities around the world that are international financial centres. Why are these cities so important to the global economy?

Slide 10 - Tekstslide

London’s financial industry (F)
The financial sector is the main industry of London: an industry mainly focused on trade and the exchange of currency.

A lot of international companies can be found in London, but some left due to the Brexit.


Slide 11 - Tekstslide

 The density of jobs in London.

Slide 12 - Tekstslide

The consequences of the financial sector for London (G)
  1.  House prices are very high. Only richer people can afford to live in the city centre;
  2. London has attracted people from higher cosmopolitan social classes and has become a very elite area;
  3. Modern architecture is often situated next to older Victorian buildings;
  4. Many Londoners living outside the centre feel disconnected to this part of the city;
  5. As more and more international companies settle in the city, the number of international people continues to increase.

Slide 13 - Tekstslide

Luton is one of London’s boroughs, which has a more rural feel to it.

Slide 14 - Tekstslide

Essence (I)
London is a financial centre: a city where the finance industry has a leading function in the city’s economy. It is an international hub for trade, the exchange of stock and currency exchange. London was able to become an international financial centre due to several factors, such as its history as an international trading hub, having English as its native language and a central position in the world, linking together the United States, Asia and Europe.

Slide 15 - Tekstslide

Havo: Look at the planner in Teams to see what you have to do.

Slide 16 - Tekstslide

London after Brexit (H)
  • Referendum 2016: The United Kingdom decides to withdraw from the EU.
  • 52% of the British people voted in favour of Brexit, but the majority of London voted to remain in the EU.
  • Many international companies decided to move:
  • The European Banking Authority has moved to Paris in March 2019
  • The European Medicines Agency moved to Amsterdam (2019).
  • While London might lose close ties with the European market, other opportunities might well arise, such as the chance to make trading agreements between different countries without EU constraints.

Slide 17 - Tekstslide

EU and non-EU goods and services trade
(Office for Budget Responsibility, March 2022)

Slide 18 - Tekstslide

UK and advanced economy trade
(Office for Budget Responsibility, March 2022)

Slide 19 - Tekstslide

Vwo: Look at the planner in Teams to see what you have to do.

Slide 20 - Tekstslide