The Clustering of Financial Services in London*



of the cluster. It is not clear there is a policy recommendation here except to monitor
property prices in relation to other financial centers.

4.6 De-clustering

It appears that it is the more routine/low revenue types of work that are the ones being
spun out of London (and, to some extent now, the South East) due to high space and labor
costs. Accessibility for skilled staff is a key reason for an office location in the cluster
together with the need to have a credible address. Policy will need to take account of the
fact that these are decisive reasons for firms not moving high order office functions away
from the cluster and in particular from the City. Movement of certain activities out of the
cluster should not necessarily be seen as damaging to the cluster overall. The research
suggests that locational centralizing and decentralizing movements of, for example, back-
office activities, are part of an ongoing evolutionary process that is important to the global
competitiveness of the cluster. While Canary Wharf has provided much needed additional
space for expansion, planned high-rise development and provision of flexible space, in
relation to functional use, size and age/cost of office accommodation in the City were
deemed to be important to meet future anticipated needs for dense clustering.

This research suggests that successful clustering can be facilitated or eroded by public
policy. Government administrative and organizational boundaries, lack of policy co-
ordination and focused management relating to regulation and transport were perceived by
respondents to be a barrier to effective decision-making and investment. Co-ordination
across policy and departmental as well geographical boundaries will therefore be essential
to support sustainable financial services clustering in London.

41



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