Demystifying the Euro in European financial centre relations: London and Frankfurt, 2000-2001

The introduction of the Single European Currency, the Euro, put London and Frankfurt’s position as European financial centres under the spotlight at the beginning of the Twenty-First Century. Many commentators suggested that London being outside ‘Euroland’ would begin to leak capital, labour and prowess to Frankfurt as the German city out-muscled London as the preeminent European financial centre for the next Century. In the British and German financial national press the discourse was one of competition and rivalry with predicted winners and losers depending on whether one stood in London or Frankfurt. The London-Frankfurt rivalry is a microcosm of traditional world city research, which in this paper is turned on its head. In-depth research with financial institutions and stakeholders in each city pre-Euro indicated that London’s relationship with Frankfurt is based more on cooperation and strong network relations between the two cities than competition. In effect, the cities are bound together by firm and regulatory ties and networks, cross-border mobility and working practices and complementary, relational roles in Europe’s architecture of financial centres. Accordingly, we conclude in this paper that London will always be Europe’s premier financial centre because of its scale and relationships with New York and Tokyo, but equally note that Frankfurt and London are co-dependent on each other in a Europe of relational cities.