Gibraltar’s ranking on the Global Financial Centres Index.

For several years now, the London based Z/Yen Group publishes the ‘Global Financial Centres Index’ (GFCI) that ranks the leading financial centres around the world. Published twice a year, in March and September, the Index compares the competitiveness of 96 financial centres by looking at attributes such as business environment (regulation, corruption, legal system), human capital, taxation, infrastructure, reputation and financial sector development.

The latest GFCI report (GFCI 23), published by the Z/Yen in March 2018 found that London was still ranked as the world’s number one global financial centre despite Brexit looming and a number of key asset management firms exiting the UK’s capital. London remains top for now (see below) with New York second and Asian giants Hong Kong, Singapore and Tokyo in third, fourth and fifth places respectively.

Top 20 Global Financial Centres

Source: The Global Financial Centres Index 23

For several years now, Benefit Business Solutions Ltd has been tracking Gibraltar’s ranking on this index, both its position on the overall index and also in comparison to several offshore centres. Tracking Gibraltar’s ranking position over the last 8 years, from September 2010 to March 2018 shows that while London, New York, Hong -Kong and Singapore dominate the Top 4 places, Gibraltar’s ranking has been somewhat more volatile, but has improved significantly since March 2017, rising over the past year from the 81st place (it’s lowest ranking ever) to the 66th place in March 2018, as shown by the chart below:

At 66th place, Gibraltar is ranked higher than some of the world’s biggest cities including Sao Paulo (67th), Mexico City (70th), Lisbon (74th), Buenos Aires (75th) and Moscow (83rd).

The sharp drop in Gibraltar’s ranking, falling by 26 places, from 55th place in September 2016 to 81st place in March 2017, is attributed in large to the perceived impact of Brexit on Gibraltar, in the eyes of the international financial community. The uncertainty over the future of Brexit negotiations by the UK and concerns over the inclusion of Gibraltar in any Brexit deal between the UK and the EU, have taken their toll on Gibraltar’s ranking, pushing it down to an all-time low of 81st place. Nevertheless, the past year has seen much improvement in Gibraltar’s ranking, with its position recovering by 15 places, climbing to 75th place in September 2017 and up to 66th place in the latest index of March 2018. Part of the recovery is possibly due to the UK’s Government commitment to Gibraltar in terms of ensuring its interests are looked-after in any future Brexit deal as well as the reassurance that Gibraltar financial services firms will continue to enjoy freedom of access to the UK market. In fact, it is this special relationship that Gibraltar enjoys with the UK, that may actually put Gibraltar at an advantage compared to other EU jurisdictions, in a post-Brexit scenario. Another possible factor which has lifted Gibraltar’s position since the start of 2018 has been the introduction of the Distributed Ledger Technology (DLT) Regulations. The DLT regulations which came into force in January 2018, have positioned Gibraltar at the forefront and leading edge of the global Blockchain and cryptocurrency market and have generated huge exposure to Gibraltar’s financial services sector. We expect this trend to continue and strengthen in the coming year as more and more top name Fintech companies are moving to Gibraltar.

Looking at various offshore financial centres, Cayman Islands and Bermuda lead the pack, with Panama coming last, perhaps still not recovering from the ‘Panama Papers’ fiasco 2 years ago. If we look only at European “offshore” centres, Gibraltar actually ranks at fifth place, well above competing jurisdictions such as Malta and Cyprus as shown by the table below:

 

At 66th place, Gibraltar is ranked higher than some of the world’s biggest cities including Sao Paulo (67th), Mexico City (70th), Lisbon (74th), Buenos Aires (75th) and Moscow (83rd).

The sharp drop in Gibraltar’s ranking, falling by 26 places, from 55th place in September 2016 to 81st place in March 2017, is attributed in large to the perceived impact of Brexit on Gibraltar, in the eyes of the international financial community. The uncertainty over the future of Brexit negotiations by the UK and concerns over the inclusion of Gibraltar in any Brexit deal between the UK and the EU, have taken their toll on Gibraltar’s ranking, pushing it down to an all-time low of 81st place. Nevertheless, the past year has seen much improvement in Gibraltar’s ranking, with its position recovering by 15 places, climbing to 75th place in September 2017 and up to 66th place in the latest index of March 2018. Part of the recovery is possibly due to the UK’s Government commitment to Gibraltar in terms of ensuring its interests are looked-after in any future Brexit deal as well as the reassurance that Gibraltar financial services firms will continue to enjoy freedom of access to the UK market. In fact, it is this special relationship that Gibraltar enjoys with the UK, that may actually put Gibraltar at an advantage compared to other EU jurisdictions, in a post-Brexit scenario. Another possible factor which has lifted Gibraltar’s position since the start of 2018 has been the introduction of the Distributed Ledger Technology (DLT) Regulations. The DLT regulations which came into force in January 2018, have positioned Gibraltar at the forefront and leading edge of the global Blockchain and cryptocurrency market and have generated huge exposure to Gibraltar’s financial services sector. We expect this trend to continue and strengthen in the coming year as more and more top name Fintech companies are moving to Gibraltar.

Looking at various offshore financial centres, Cayman Islands and Bermuda lead the pack, with Panama coming last, perhaps still not recovering from the ‘Panama Papers’ fiasco 2 years ago. If we look only at European “offshore” centres, Gibraltar actually ranks at fifth place, well above competing jurisdictions such as Malta and Cyprus as shown by the table below:

Source: Z/Yen Group, Global Financial Centres Index 23 (March. 2018)

Over halfway through Brexit, Britons remain as divided on the issue as ever. And people’s entrenched views continue to colour most predictions on how Britain will fare when it eventually splits from the EU. Whatever your view on Brexit, the truth is that while progress has been made towards an orderly exit from the EU, we simply don’t know whether it will eventually be achieved or not, and what would be the final outcome for Gibraltar.  Z/Yen Group is predicting a possible change once GFCI 24 will be published in September 2018 saying that it “should be fascinating as the continuing impact of Brexit and the outcome of a number of elections on our respondents’ perceptions will be known”.

At Benefit Business Solutions we believe that no matter the post-Brexit outcome, Gibraltar’s destiny is much at the hands of its people. It is up to us- the business community of Gibraltar- to innovate, re-invent our offering and market our financial sector as much as possible in order to raise Gibraltar’s ranking higher and higher, and no Brexit will stop us!