London is no longer perceived as the world's preeminent financial centre by global professionals, the majority of whom now see New York as the world's financial hub, with Brexit uncertainty weighing heavily on perceptions of the UK capital's outlook, research from Duff & Phelps suggests.
The advisory firm's latest annual Global Regulatory Outlook report found just 36% of respondents from the sector currently see London as the foremost global financial hub, a 17% decrease from 2018, while 52% see New York as the world's financial centre, up 10% from last year.
Brexit "cast a shadow of uncertainty" over the UK economy in 2018, the report said, and "has now escalated to a full-blown crisis".
Looking ahead, we see the combined effects of Brexit and the emergence of Asia with respondents expecting Hong Kong to play a bigger role as a leading global financial centre"
Respondents' confidence in the City's prospects do not improve on a five-year horizon, with just 21% expecting London to be the world's financial centre in 2024, compared to 44% backing New York to retain its place.
Notably, 12% picked Hong Kong as 2024's global financial centre - up from 3% last year.
Duff & Phelps said this reflected "the combined effects of globalisation and of Brexit, as the financial industry searches for a new EU financial centre".
Managing director of compliance and regulatory consulting at Duff & Phelps Monique Melis added: "Brexit has cast a shadow of uncertainty over the UK's world-class financial sector and its ability to dominate other major financial hubs in the coming years.
"Looking ahead, we see the combined effects of Brexit and the emergence of Asia with respondents expecting Hong Kong to play a bigger role as a leading global financial centre."
AML and whistleblowing top regulatory concerns
Elsewhere, the report found anti-money laundering (AML) considerations and the growing influence of whistleblowing to be the most pressing regulatory concerns in 2019.
Despite this, 30% of respondents rated at least one of their firm's AML components as being either "not at all effective" or only "somewhat effective".
Similarly, while 86% of respondents agreed that whistleblowing programs should be mandatory, only 75% said they had such a program in place.
Melis said: "There is a correlation between how firms rate the components of their AML programs and how they rate their whistleblowing programs.
"Effectiveness in one program correlates with effectiveness in the other.
"While firms have become more diligent and sophisticated in their compliance and risk management, there is also a growing sense of regulatory fatigue that cannot be overlooked.
"Without robust compliance the sector will be vulnerable to risks that are only just emerging."