Frankfurt has attracted only a handful of bankers in the past four years. If companies have moved to Paris, they keep it a secret. Despite all the money and political capital that Germany and France have invested to ensure that London is no longer the financial capital of Europe following our exit from the European Union, until now , it had very little impact. Some stock exchanges have moved, mainly to Amsterdam, and therefore have a few deposits, but these are just numbers stored on a server. Most of the real work is done in London.

The City may well feel it is time to relax. But hold on. Maybe we are looking in the wrong place. London has a lot of competition in Europe – it just doesn’t come from the cities we expected. Financial centers are booming in two other cities that no one usually pays too much: Warsaw and Stockholm. Sweden has more than 1,000 listed companies, more than Paris or Frankfurt, while Warsaw has 770, or only 35 below Paris. Both are far behind London, which has over 2,000 listed companies, but they are winning fast.

Fast growing economies

Warsaw relies on the strength of the Polish economy. Annualized growth of over 4% per year is gradually making Poland one of the richest countries on the continent (its stock market is one of the few bargains in the world, but that’s another story). This spawns many growing companies, some of which are ready to float. At least 20 companies are expected to enter the mainstream this year, and at least 16 more on NewConnect, its version of Aim. But it is also starting to attract global companies. Pepco, owner of discount retailer Poundland, also has a large business in Poland and decided to register in Warsaw earlier this year, rather than London.

Likewise, Stockholm thrives thanks to a booming tech industry. Sweden is just behind the UK in Europe in the number of new tech companies it has created, and per capita it is probably ahead. Nasdaq Stockholm has benefited enormously from this, as well as positioning itself at the center of a dynamic and technological Nordic economy which also encompasses Denmark, Norway, Finland and Estonia. The trend is not expected to end anytime soon. Stockholm-based buy-now-pay-ulter start-up Klarna is valued at $ 45 billion, making it the most successful fintech company in Europe. When it is listed, it will be able to choose its home market very well – there is no reason not to do so – and this will give Stockholm a new impetus.

Four big advantages over Britain

Warsaw and Stockholm have four strengths going for them. Both are outside the single currency, but inside the EU, just like Britain was before we left. This means that they have their own central bank which can help the financial sector when needed, and they have their own national bond market. They can also be much more flexible, both in the development of regulations and in their implementation. Of course, they still have to comply with the Brussels guidelines, but they have more independence than they otherwise would.

Then they have thriving entrepreneurial economies to tap into. An emerging market like Poland will always have a lot more energy than a mature and developed market. It means a constant stream of companies coming into the market. Third, they have competitive tax systems. Poland has no capital gains tax and only levies the standard 19% tax rate on gains, while Sweden is much more competitive than it was before. And finally, both are within the single market. Brokers and asset managers based in either city have full access to financial markets across the continent while maintaining flexibility and independence. The UK lost that, and there is little chance of getting it now.

London did well to repel the assault on Frankfurt and Paris. Warsaw and Stockholm could be more serious challengers. The City cannot take its status as a European financial hub for granted. Competition is coming from new centers. He will have to work harder to survive this.