The Greenwich Meridian of Finance: London’s Struggle to Maintain its Role in the Global Banking (1970s – Early 2020s)

Abstract

The article analyzes the development of London as a world and national banking centre over the past 50 years, from the early 1970s to the present. The study is based on large arrays of historical statistics, systematized and processed by the author. London was the largest banking centre in the world in the 19th and early 20th centuries, but it gradually lost its position thereafter; by 1970, it was at third place in the global hierarchy. New factors that emerged in the 1970s (for example, the crisis of the Bretton Woods monetary system) contributed to the further decline of London. At the next historical stage, the situation changed radically as a result of the deregulation of the national financial system, implemented by the Conservative governments of Thatcher and Major (1979–1997) and then Blair's New Labour (1997–2007). Taking advantage of new business freedoms, British banks significantly expanded the scope and directions of their activities. In 2008, London ranked second in the world in terms of banking assets. However, this was largely the result of overproducing risky financial instruments. The British banking system suffered a severe downturn during the Great Recession of 2008–2009. Nevertheless, the main problems were then concentrated not in London, where banks remained relatively stable, but in Edinburgh. Later, London-based corporations led the recovery of the national banking system. London, which has long lost its absolute leadership, still remains a very important financial hub and is undoubtedly one of the five or six largest banking centres in the world.