The Gulf states: a new competitor for the City's financial crown?

Bahrain and other Gulf states could eventually threaten London's financial dominance.

Bahrain Manama Skyline Gulf States Panorama at Night
(Image credit: Getty Images)

They rely purely on oil and gas. They don’t have much in the way of a domestic economy, nor do they have the depth of technical skills to compete in highly sophisticated service industries. Yet commerce hubs in the Gulf, such as in Bahrain, are emerging as genuine finance centres on their own terms. Most of the major European financial centres think they are competing purely with one another. But those in the Gulf could, in time, pose a real threat to Paris, Frankfurt and, of course, the City of London too.

On a visit to Bahrain earlier this month I was struck by how quickly the island kingdom is developing as a finance centre. “Financial services are already the largest sector of the economy, overtaking oil and gas in 2020,” Khalid Ebrahim Humaidan, the governor of the central bank, told me. One of the country’s advantages, he believes, is that both monetary policy and regulation are combined in the central bank, allowing it to maintain flexibility and ensure stability while promoting growth.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.