A quarter of the 500 largest companies in the world in 2023 are based in just five cities—and for the first time in five years, London is not one of them.
England’s capital, which is among Europe’s largest cities by population and is also Britain’s business hub, slipped from the top five rankings this year, down to eighth position with nine companies. In 2022, London occupied fourth place, with 13 companies headquartered in the city.
Fortune Global 500 top five cities:
- Beijing (53 companies in the Global 500)
- Tokyo (29)
- New York (16)
- Seoul (13)
- Shanghai (12)
Over the years, London has been competing neck-to-neck with another European city—Paris. The French capital is home to a mix of finance, luxury and consumer brands, and in 2023, it passed London to come in sixth on the list of most Global 500 companies.
London has been a critical hub for the U.K. and for the entire European region for years. In 1995, 27 Fortune Global 500 companies were based in the city.
Multinationals have been attracted by the prospect of trade with Europe and the rest of the world by being based in London. Unilever, which was founded in 1929, even consolidated its two headquarters in Rotterdam and London in favor of being domiciled in the British capital city.
“For a long time London had an economic growth premium over the U.K. and matched or exceeded other major global cities,” Tim Lyne, associate director in the cities team at advisory firm Oxford Economics, told Fortune. “It’s connectivity, geographical position (and being in the EU), time-zone and use of the English language are all factors which helped make London so attractive to inward investment.”
However, increased isolation and export hurdles caused by Brexit as well as depressed economic activity during the pandemic have presented new challenges for companies operating out of the city.
“London’s position has come under threat from a number of challenges including rising costs (its success has made it a relatively expensive city), a slowdown in U.K. economic growth, the impact of COVID, and Brexit,” Lyne said.
In 2010, when the Eurozone crisis was still ongoing, London had 18 Global 500 companies; in 2015, that number climbed to 19.
The Brexit vote the next year presaged London’s drop, and the last time London slipped below the top five was in 2019, amid the lead-up to Brexit going into effect. That year, it hosted 11 Global 500 companies. In all of Britain, the number of companies has shrunk from 26 to 15 in the last decade.
Lyne said that while London will generally continue to be significant in the global context, it may not reclaim its old glory.
“Its position has been eroded and we expect its growth premium compared to the U.K. and other global cities to be much smaller in the future than it has been in the past,” he said.
Still, even though London slipped down the ranks this year, it’s not all doom and gloom for the English capital. Some of the largest companies in the world still call the city their home, including fossil fuel giants Shell and BP, which rank ninth and twenty-second globally.
What about the rest of Europe?
Other countries in Europe are facing a similar decline as business hubs. In just a decade, Italy has seen the number of Global 500 companies shrink from eight to five, while France has seen a dip from 31 to 24. Germany has been an outlier, with the number of companies growing from 29 to 30.
Jean-Pascal Tricoire, CEO of Schneider Electric, a Global 500 company based in France, told Fortune that other countries like the U.S. and China have allowed big tech to flourish in a way unlike Europe.
“Companies need a domestic market of a large scale to build a presence globally,” he said, “especially in a world where companies from India, China, and U.S. are already big.”