Is the financial future of London evolving or eroding?: UK Exchange newsletter from CNBC

This report comes from the British CNBC exchange form this week. Like what you see? You can subscribe here.

After several years in the Big Apple, I knew that my return to London would be a culture shock.

Instead of Times Square with its skyscrapers and blinding lights, I walked around Piccadilly Circus and its victorical buildings; Dunkin donuts on each large intersection would be replaced by Gregs at the corner of the street, and I would order a roll of sausage instead of a bagel for lunch.

But beyond the trivial changes, I was in a more important shock than I thought – on the economic front.

First, the cost of living, rent and public services to public transport has increased considerably.

A London return ticket to my family home in Norwich is now more than 30% – costing £ 72, against £ 54 that it cost me.

It might not have had to be such a shock; After all, the United States has experienced significantly lower inflation than the United Kingdom in recent years.

More recently, prices in the United Kingdom increased by 3.6% in the year until June 2025, against an increase of 2.7% of the United States, the Bank of England now provides that inflation peaks at 4% in September, returning to its target by 2% by mid-2027.

When I moved to New York, it was a year and a half after the Brexit referendum. All these years later, and Brexit continues to dominate discussions.

In conversations with CEOs and business leaders, I hear how Brexit is always the economy, in particular thanks to commercial obstacles, increases border costs and a reduction in productivity in relation to the European Union.

It is also worrying that London’s reputation as a leading global financial center is increasingly in question, because it has trouble competing with New York, Hong Kong and Francfurt.

The fundraising of the first public offers in London, on the other hand, has dropped at its lowest level in at least 30 years, according to Dealogic data, in a sign that the UK’s stock markets lose their attractiveness.

The governor of the Bank of England, Andrew Bailey, told me last week that the uncertainty of business in the country remains very high, after having asked him questions about the effectiveness of interest rate reductions by the Central Bank.

“There is a much higher level of uncertainty and since many investment decisions are irreversible once we make them, the value of waiting therefore increases, and that’s what happens,” he said.

Another burning subject in London in recent months has been changes in so -called non -domestic tax rules for rich foreigners.

The London real estate market was particularly affected by uncertainty, according to the website of the Rightmove property, which cited confusion around rules as a reason for reducing the demand of buyers – both national and foreign – on the capital’s housing market, as the prices requested at the house fall.

Despite the challenges and the reverse, everything is not lost. Business leaders tell me that there is still hope and opportunity for London.

Although there are rising risks of inflation, the Bank of England has reduced interest rates this month. The Bank’s Monetary Policy Committee has cited progress in disinflation of underlying internal prices in the past two years, because IPC inflation and basic services remain stable, while highlighting the reduction in wage growth.

Lower interest rates could help stimulate consumption and investment, as well as to help put the real estate market on the right track. More affordable mortgages can ultimately allow more parity between buyers and sellers in the second half.

With regard to Brexit, commercial investment in the United Kingdom stuck after the vote to leave the block in 2016. However, there were signs of recovery, emphasizing specific sectors such as technology and pharmaceuticals. The United Kingdom has sought new commercial offers outside the EU, especially with Australia, New Zealand and India-and of course, the United States

In fact, the British trade agreement with President Donald Trump – although worse than during his first mandate – is always better than the EU agreement with the United States

Authorized accountants based in London and Lubbock Fine commercial advisers noted that the substantial price advantage of the United Kingdom could benefit to the country as a manufacturing center for EU companies, seeing them to move to the kingdom

However, when it comes to rebuilding London’s reputation as a power of financial services, there is more work to do.

Above all, this will lead to political decision -makers who create an environment conducive to business.

In my recent conversation with Antony Jenkins, a former CEO of Barclays, he underlined the need to stimulate access to capital for start-ups and minimize the cost of business.

It has been positive on the reforms that are made to encourage more investment in the private sector and are interested in reclaiming the R&D tax credit towards higher growth companies. But in the end, Jenkins says that it takes a greater accent on growth policies to stimulate GDP per capita and attract entrepreneurial talents.

“Let’s face it, there are a lot of attractive things about the United Kingdom, we have market leadership in the world in things like financial services, technology, AI, creative industries and the United Kingdom is an ideal place to live, so we have all these forces,” he said.

“What we have to do is amplify other things that will make this place more attractive to business.”

– Ritika Gupta

Andrew Bailey, governor of the Bank of England, discusses the drop in interest rates of the central bank, inflation and uncertainty surrounding future decisions on monetary policy.

Ritika de CNBC takes a look at the capital’s housing market.

England Lionesses and Jess Carter by Gotham FC told Tania Bryer de CNBC that social platforms “must do better” to protect people online.

– Holly Ellyatt

Tesla d’Elon Musk is launching the attempt to provide electricity to British households. The company based in Texas officially submitted its request for an electricity license to the British energy regulator ofgem at the end of last month.

The government does not admit it, but the tax increases arrive – and there are no good options. British Prime Minister Keir Starmer was asked about suggestions that tax increases are necessary in autumn, but said that he “did not recognize” the figures. However, he refused to exclude hiking VAT, income tax and corporate tax.

The chief of the Bank of England said that no rift with the British government because the delay in Revolut license attracts a meticulous examination. Revolut authorization as a fully authorized bank has become an important question for the British government, in particular because the key figures in the technological industry have challenged the tax changes that affect the rich.

– Holly Ellyatt

UK FTSE 100 had a week in a week, slipping 0.1% in the last 7 days to end Tuesday at 9,147.81.

After a leap in July (when it increased by more than 4%), the index seems to have set foot in August – a bit like many traders – following the uncertainty and volatility of the market which accompanies it surrounding the Trump pricing regime.

SterlingAs for him, increased against the dollar in last week. It was exchanged more than 0.6% at $ 1,3517 Tuesday evening after the UK data for jobs – which showed cooling from the British job market, but strong wages growth – and American inflation figures, which are lower than the dollar.

Bond yields of the British government also checked above, with the Yield at 10 years Exchange about 4.626% on Tuesday.

– Katrina Bishop

August 14: GDP of the second trimester in the United Kingdom; Trade balance data for June; RICS HOLIZING PRICE FOR JULY

August 20: Inflation data in the United Kingdom for July; Retail price index for July

– Holly Ellyatt