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London versus Frankfurt

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two cheers for Canary Wharf

When I was in Frankfurt before Christmas, I was told the city had designated 64 sites for tall buildings as part of a Euro-related bid to become the greatest financial centre in the world. Three months later the news burst upon London, in a report in The Times, about the Frankfurt 2000 plan. The number of buildings proposed seems to have come down a bit, to 35, but the goal remains the same: today London, tomorrow the world.

So, is the capital dismayed by what the London Evening Standard describes as 'the biggest threat to the City for 50 years'? You must be joking. Why, as my unremittingly cheerful City sources tell me, London has more people working in financial services than Frankfurt has people in total. Phew! That's all right then. Or at least it would be if one did not hear the ghostly echo of Alf Garnett, jeering at a newsreel showing German tanks: 'Cardboard! They're all made of cardboard!'

Ever since the appointment of the excellent Michael Naumann as minister of culture, Germany seems to have emerged from its self-imposed penance as the punch-bag of nations. Reunited, the largest economy in Europe, the home of the European Central Bank as well as the tallest building in the ec, Germany is no longer disposed to muck about. In Britain, in the years since the Big Bang financial reforms, every merchant bank, almost every stockbroker of note, and virtually the whole of the largest futures market outside America has either been bought up by a foreign firm - including the German giants Deutsche, Dresdner and Commerzbank - or migrated elsewhere.

Consequently, there is no longer much national sentiment to draw upon when trying to keep markets in London. If operations are easier or cheaper in Frankfurt, then that is where they will go - as indeed, according to property agents, they have already started doing. As for the old chestnut of the relative size of the cities of London and Frankfurt, contrary to popular belief the disparity confers every advantage upon Frankfurt. Like a Middle East country with a small population and a lot of oil, a small city with a large financial sector can be far more competitive than a vast city with a financial sector not proportionally larger. As to whether highly-strung financial services employees vote with their feet against cities without opera houses, the roh is obligingly putting that to the test over the next year or so.

The most revealing thing about the Frankfurt threat is the new role in which it casts Canary Wharf. Once considered a disreputable 'alternative financial centre', only back from the receiver by the skin of its teeth, it is now being talked up as London's financial salvation. Unlike the conservation-constipated City - hypnotised by its priceless views of St Paul's and its laughable 'groundscrapers' - Canary Wharf is on the brink of a market flotation that will throw the switch on phases two and three of the scheme. These will be big enough and tall enough to match the area of all the scattered Frankfurt floorplates in a single development.

Whether the developers can afford to match the Frankfurt range of financial inducements is another matter.

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