At the height of the financial crisis, the German magazine Spiegel thrust the knife into the UK, then twisted it. Great Britain, it warned darkly in a 2009 leader article, stood on the ‘brink of economic ruin’.
The future of London and its vast financial sector was in doubt. Britain, it concluded, was set to match the demise of a genuinely bankrupt North Atlantic island, becoming, as the article claimed in its headline, ‘Iceland on the Thames’.
There is a German word for it: Schadenfreude.
But Spiegel was wrong – at least about the fate of the City. The UK’s economic rebound may have stalled for now but London – despite the financial crisis, and despite the threats to move to lower taxed locations from banks and hedge funds – is powering ahead.
The banks were miffed at the moves in the Budget this week to increase the £2.5billion levy so they do not gain from the lowering of corporation tax rates.
Chancellor George Osborne also moved to close a loophole that allowed highly paid individuals to channel their rewards through lightly taxed employee benefit trusts.
He signalled a decisive break with the love-in between politicians and the City, saying while he wants ‘the City of London to remain the world’s leading centre for financial services’, he also wants to rebalance the economy.
Regardless of its cries of woe, London has not been dislodged as the world’s premier financial hub.
In its twice yearly ranking of 75 cities, London retained the edge over New York and Hong Kong as the top venue for banking and financial services.
The report is based on surveys of industry professionals and objective factors such as office rental rates, airport satisfaction and transport.
London came first in every category bar two, where it lost out to New York.
Jobseekers are flooding to London again, from Europe and North America, and also from booming Asia.
Investment banks employed aggressively across the City last year and the hiring continues, with Barclays Capital, Citi and Nomura among others restocking their depleted trading floors and banking teams.
But the City and Canary Wharf aren’t just magnets for big banks. And far from leaving, banks are coming here – even German ones.
Berenberg Bank, a 420-year-old private outfit based in Hamburg, this year opted to open its global private banking offices in the heart of the City.
The bank is chasing non-doms, foundations with cash to invest; investment bankers with cash to burn; and the landed gentry – families with mottos, crests and deep pockets.
‘We believe in London,’ says managing partner Andreas Brodtmann. ‘If you read German newspapers, they saw the negative side but we see so much potential.’
The City still boasts the deepest pool of banking talent on the planet.
Perfectly positioned between New York and the Far East, it is a global hub for everything from fashion and media to accounting and medicine.
Then there is the property market. Wealthy Indian buyers opt for property in Mayfair. Singaporean and Cantonese buyers prefer posh new-builds such as The Hawksmoors near London Bridge.
Amous Lee, director of international investment at property developer Knight Frank in Hong Kong, has been run off his feet in recent months.
In December, he sold a £15million Kensington mansion to a Chinese businessman.
In February a Malaysian businesswoman snapped up a Belgravia townhouse for £1.2million.
‘She called me at 10am from London looking for a property,’ remembers Lee, ‘and bought 24 hours later, the full amount in one payment.’
Last year six in ten new central London properties were sold to customers from the Orient including a new category: mainland Chinese-high on their country’s economic boom. The only looming dangers, it seems, are a repeat recession and a deepening of the ‘banker bashing’ of recent years.
‘The UK has always prided itself on being open to firms and people from around the world, but this message has become distinctly blurred in recent times,’ warns Stuart Fraser, policy chairman at the City of London Corporation.
But if anything, the financial crisis has reinforced the City’s status. After all, if the first and worst global recession of the 21st century cannot knock London off its perch, probably nothing can.
And we all have the Olympics to look forward to and the tourism dollars, euros and yen it will bring.
London may not be fully off the hook yet, but it is certainly back in business.