Languages in the City of London
Money Talks
The City of London is the meeting place of the dollar, the yen and the Euro. More than a global financial centre, it is the most linguistically rich place on Earth. There are over 6,000 languages spoken in the world today and more than 300 are spoken on a daily basis in City of London businesses. Not only is London the world’s most linguistically diverse city, but our local language, English, is the most widely spoken language in the world today for business and professional communication.
In a recent speech, the Lord Mayor of London praised the City’s multi-cultural, multi-lingual workforce: “I cannot emphasise more just how important the creative environment in the City is now. This allows people with brains, energy and enthusiasm to innovate and create new products. It is this culture which has drawn the great financial institutions – from Europe, North America and Asia-Pacific, to London. Their presence, in turn, generates enormous competitiveness. And this increases our efficiency and lowers our costs. It is this conglomeration of the mass of business in London, with our huge international workforce, which has enabled us to be at the forefront of change and innovation in world markets.” Indeed, he has dedicated his term of office to promoting the Square Mile as an international financial capital.
Within London, the financial services industry is a major source of employment and the greatest wealth generator in Greater London. It is a highly international operation and 40% of the workforce within the City is employed by overseas companies. The City of London is the most attractive place in the world in which to access international capital, to raise project finance, and to list and trade instruments such as international equities and bonds. The largest financial centre in Europe, London is the base for the greatest collection of international, wholesale and specialist retail financial markets in one location within Europe. Its market shares in the principal financial sectors are larger than any other centre in Europe:
- Its 478 overseas banks transact 19% of world cross border lending. The largest number of them are from Germany (24 banks) and France (13) banks, with a total of almost 8,000 employees;
- One third of global foreign exchange turnover is executed in London, compared to 18% in New York and 4% in Paris. The main currencies traded are the dollar with 33% of business; and the Euro at 29%. Sterling is only 8%;
- The City is the world’s largest derivative centre with 35% of over the counter business and an almost complete domination (98%) of Euro short-term interest rate derivatives;
- The London Stock Exchange trades 59% of foreign equity turnover. Euro denominated stocks now comprise the largest sector by currency;
- The City is the world’s largest centre for institutional fund management with nearly $2.5 trillion under management;
- Almost $2 billion worth of base metals are traded annually on the London Metal Exchange;
- London is the world’s largest market for internationally traded insurance. It controls 27% of the world’s aviation insurance and 22 % of the marine insurance market. More than £14 billion in gross insurance premiums are negotiated every year on the London insurance market, headed by Lloyds.
- London is the world’s premium maritime centre. In and around the Baltic Exchange, one can charter cargoes, buy and sell vessels, borrow the money to do so, insure them and resolve contractual difficulties. Lloyd’s Register of Shipping is the world’s largest ship classification society and the official surveyor of ships for more than 125 governments. London represents almost half of the world’s tanker chartering and almost 40% of the world’s dry-bulk chartering world wide. And all but 2% of world trade goes by sea.
These are some of the reasons that over 65% of the Global Fortune 500 companies in all sectors, not just finance, currently have offices in London. Many international banks have centralised their corporate finance, securities and derivatives, international treasury and risk management in the City. Often foreign exchange, international bond and equity trading and research are also based in London. Non government Euro bond and equity issuance and M & A advisory business is mainly carried out in London. Transactions from all over the world are executed in London due in some part also to easy access to the pool of qualified, multi-lingual professionals. All this is allowing businesses to achieve substantial economies of scale and scope as a result of the presence of the full range of financial services operating in one location.
London is situated in the time zone between Tokyo and New York. As the markets close in Japan, they are opening in London and Wall Street begins trading when it is early afternoon in London. London is therefore an ideal place in which to raise project finance, or to list and trade instruments such as international equities and bonds. Another key to the success of the City is its openness and attraction to foreign business. “London has been the international financial centre for several centuries. It has never served the vested interests but rather has continued to encourage changes and innovations of the financial industry,” acknowledges Shinichi Yoshikuni of the London branch of the Bank of Japan.
London has a long tradition as an international trading centre. Leadenhall market stands on the site of what was once the largest Roman forum north of the Alps. Indeed, the ancient historian Tacitus praised Londonium as “a fine emporium for trade”. Setting up shop in Lombard Street, the Italians brought foreign banking and double-entry book keeping to England in the Middle Ages, allowing City Livery companies to put up capital to trade with the farthest corners of the known world through the first joint stock companies: the Muscovy Company, the East India Company, the Hudson’s Bay Company and the ill-fated South Seas Company. Gradually, the City turned from trade in commodities to trade in financial products.
Almost 300 years ago, Joseph Addison wrote in the Spectator: “There is no place in the town I so love to frequent as the Royal Exchange. It gives me a secret satisfaction and in some measure gratifies my vanity as I am an Englishman, to see so rich an assembly of countrymen and foreigners consulting together upon the private business of mankind, and making this metropolis a kind of emporium for the whole earth…I have often been pleased to hear disputes adjusted between an inhabitant of Japan and an Alderman of London; or to see a subject of the Great Mogul entering into a league with one of the Czar of Muscovy. I am infinitely delighted in mixing with these several ministers of commerce, as they are distinguished by their different walks and different languages….”
Addison might not therefore be surprised to learn that today in London it is possible to recruit staff who speak almost any world language. London First, the inward investment agency for London, reports that an increasing number of international firms relocate to London because they can recruit staff with any range of language skills, many of whom are bilingual in English and have UK university qualifications. Indeed, London has 33 immigrant communities numbering more than 10,000.
Over 300,000 Londoners work in the financial services industries and almost as many again work in ancillary or supporting industries. London’s population has increased by almost 5 % in the last 10 years. Whilst, of course, some of this has been due to normal immigration, a significant proportion has been due to the generation of new jobs for skilled professionals, the talented and the creative. And the moves of these highly skilled professionals from other economies to London is linked directly to the development of financial related businesses. A recent article in the European issue of Time magazine, entitled “Generation Europe”, highlights young, mobile, ambitious multi-lingual Europeans. They are keen to relocate to the UK for the high rewards on offer in the City as well as the quality of life in London. They are also attracted by the UK’s relatively low tax rates. The City is therefore able to offer not only an excellent market infrastructure, but also the largest pool of researchers, traders, brokers, lawyers, regulators, IT specialists and investment managers who make up the market.
Furthermore, it is estimated that 40% of City employees now work for non-British employers. These workers often already speak or are keen to learn the language of their companies. More and more UK business people are studying foreign languages in order to succeed in the City. An annual survey of senior European business executives recently praised London for the availability of language skills. The City is unique in Europe in being able to provide a large, skilled and multilingual labour force. The languages most in demand are western European: French, German, Spanish, Italian, Portuguese and Scandinavian. There is also an increasing demand for languages from farther afield, such as Russian, Japanese, Arabic and Mandarin. London is quite simply Europe’s best business location for international companies.
Language is a tool for communication and the better people can communicate with each other, the more successful their relationships are likely to be. Competence in foreign languages offers commercial possibilities to businesses and career possibilities to individuals, not to mention cultural enrichment and professional mobility in the global economy. It is perhaps fitting that the Lord Mayor’s first activity on January 1, 2000 was to grant a charter to the Worshipful Company of World Traders, underscoring the City’s commitment to the promotion of international trade and commerce. In the new millennium, languages will continue to be an integral element of business in the Square Mile.
© Dr. J. Lancaster 2000
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