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Report Highlights Longer Term Growth for European Financial Markets

The battle between US and European financial markets gained momentum last year with Europe leading its rival in foreign exchange turnover and international bank lending, but lagging in areas such as equity market turnover and domestic bonds.

The findings were released last week by International Financial Services London (IFSL) in its Financial Market Trends Europe vs US report, which compares the size of key financial markets in both regions.

The report shows that in eight out of 17 financial markets in 2008 the US improved its share relative to Europe. In most cases this was because US markets declined by less than those in Europe. However, it lost ground to Europe in six, including international bank lending, foreign exchange turnover and insurance premiums.

The largest relative gains in Europe and the US in 2008 were in those markets where each was already stronger, the report says.

The relative positions remained unchanged in three markets: high net worth individuals’ assets, funds under management and private equity funds raised. ??

Over the longer-term, between 2001 and 2008, Europe’s share has risen in 13 out of 17 markets. The US increased its share relative to Europe in just four markets. The report says that the long-term trend “demonstrates London’s continuing importance as the capital for many of Europe’s wholesale financial markets”.??

Duncan McKenzie, director of economics at IFSL, says: “Recent trends have been slightly less favourable for financial markets in Europe but, led by London as its financial capital, Europe has the opportunity to build on its cluster of expertise”.

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