The Clustering of Financial Services in London*



4.3.2 Role of Local Government

Banks more than other lines of activity find help from the local authority beneficial.
This implies an opportunity for co-operative working between the banks and local
government and it merits review whether ways can be found to reinforce this link.

4.4 Interdependencies

The balance of co-operation and competition between sub-sectors is manifested in the
cluster as in the classic clusters literature. Large firms and banks place particular
importance on being near other leading competitors as a feature of being in the cluster
which helps maintain their competitiveness. This finding has policy implications relating
to the benefits of the cluster specifically as a hub-and-spoke spatial form (Markusen, 1996).

4.5 Disadvantages of a London Location

4.5.1 Transport

Transport has already been commented on under other headings. This is highlighted as
an extremely important concern of business with clear evidence that it is acting as a drag on
the efficiency of London and possibly beginning to deter visiting international clients.
While not imminently threatening the cluster it appears to be a high policy priority to ease
the problems identified, in particular travel to work, travel East-West across central London
and travel between Heathrow (and other airports) and the London cluster.

4.5.2 Regulation

Here the evidence was equivocal in so far as firms indicated that rigorous regulation
was important in giving quality assurance to work done in London but many also expressed
the view that regulation was becoming burdensome, indeed unmanageable. Regulation
emerges as a particularly important concern for banks. The policy implication is that the
regulatory burden needs to be reviewed and monitored in relation to rival financial centers.
There is also a need for co-operation across agencies to ensure that contradictory effects on
London’s attractiveness as a place to do business are not created.

4.5.3 Cost of Premises

While the most highly ranked disadvantage in the questionnaire survey, the interview
evidence implies it is more an annoyance to firms than a fundamental threat to the viability

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