GUEST COMMENT: In this cluster economy, it's all about critical mass

3 August 2011

2 minute read

GUEST COMMENT: In this cluster economy, it's all about critical mass

Why is the City so successful? It's got something to do with the timezone. It's also related to the UK's historic commercial success. Importantly, it's also down to the effects of the 'cluster.'

Like the 'tech cluster' in Silicon Valley, a unique gathering of innovative international firms have grown up here. From accountants to solicitors, from actuaries to underwriters, from brokers to reinsurance firms, from financial PR specialists to corporate advisers, London and the whole of the UK has developed a set of financial services skills that is unrivalled.

It is often said that it takes 18 different types of firms to enable an organisation to list its shares on the stock exchange - all of these firms and skill sets can be found in abundance in the UK.

This is why international financial services firms make their homes here. The cluster is most in evidence in the City, but it's present elsewhere too. J.P. Morgan is the biggest employer in Dorset, Deutsche Bank employs thousands in Birmingham, Citi is a major employer in Belfast, and the list goes on.

If some of these international firms are lost, part of the cluster will be removed. The clear danger is that the 'gravity' that holds it together would be weakened. The cluster has been built up over 100 years. We risk losing it within a decade.

At a time when others are being so welcoming to our financial services and related professional services sector, we should pause and ask why.

Why is it that they want the jobs, tax and social contribution that we seem so keen to expel?

This is a competitive world and we must not lose our competitive advantages - let alone drive them away.

AUTHORChris Cummings

Insider Comment

To
Top Gun
5 August 2011
Jack - Read your previous comment, it is full of wishful thinking.
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re
realist
5 August 2011
Jack you are a long term strategist, no doubt. But you underestimate national competitive rivalries in Europe and short-sighted governments looking for (socialist) popular votes.
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Ja
Jack
5 August 2011
Top Gun - Yes, thank you. Why is that relevant here?
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To
Top Gun
4 August 2011
Jack - Do you know what wishful thinking is?
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Ja
Jack
4 August 2011
The developing word is catching up, no mistake, and in many cases has already caught up. But it is worth remembering that when China is number one in the world, the US (or possibly the EU if regarded as one economy) will be number two. Nicely situated between the two is London, a place where you can do business with New York and Shanghai on the same day, and which is also the major financial centre of the EU. Looking at other predictions, the giant economies of the future will be China, US, India, Russia, Brazil, and Mexico (and possibly the EU). Again, London is perfectly situated to be a kind of central hub. Yes, the 'cluster' and the UK's historic success are important, as is the fact that English is the international language of business, and also the fact that English law is a kind of international standard. Taking all these factors together, I don't really think that London's status is likely to diminish, whatever happens over the next few years.
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