Global trust in UK financial services surges

Confidence in the UK has reached a new high with 87% of global financial services firms saying they plan to establish or extend UK operations this year, according to a new survey.

Skyline of London with Tower Bridge and The Tower of London on view
Ernst and Young's latest 'EY Attractiveness Survey' found the vast majority of global firms believed the UK offered the right conditions for environmental, social and governance (ESG) investment.The confidence among global companies was reflected among British financial services firms, with nine out of ten planning to retain or grow their operations in London - up from just 50% in 2020.

Testament to the stability and resilience of the mature UK market

Anna Anthony, UK financial services managing partner at EY, Anna Anthony, described the survey results as encouraging."This is testament to the stability and resilience of the mature UK market which continues to ably withstand the material challenges and uncertainty of both the pandemic and Brexit," she said."As we look to the future of financial services, it’s also positive that investors see the UK as the right place for growth in ESG, which, post COP26, is a major and increasing focus for boards."As one of the oldest and most established financial structures with deep capital markets and an unrivalled regulatory system, the UK clearly has many unique selling points attractive to investors in both boom times and crisis."With investor confidence at such a high point, the key now is to avoid complacency and ensure, especially on green finance, that rhetoric is turned into action."
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Key risks for future investment

The survey identified key risks for future investment as future pandemics, environmental or cyber crises, the liquidity of capital markets and the availability of capital.While confidence in London as the chief location for new financial services remained strong among the majority of companies, more than half also noted the need to further prioritise geographic rebalancing across UK regions and nations to meet the government objective of ‘levelling up’ the economy.The survey found that, outside the capital, Scotland was perceived as the most attractive area for financial services investment, along with the the East of England.

What could influence greater investment in UK regions and outside of London?

By contrast, the North East and the North West have both seen a decline in global investor sentiment towards establishing or expanding financial services operationsWhen considering investing regionally, the survey found investors were looking for improvements in the strength of business networks, better access to regional grants and incentives for investment and R&D, and more availability of business partners and suppliers.Steve Robb, North financial services managing partner at EY, commented, “The UK has been the top European location – and London unsurprisingly the top European city – for foreign direct investment for over twenty years."As the levelling up agenda ramps up, the UK’s regional hubs should increasingly support the deeply-established City of London, and start to benefit more from inward investment."While confidence levels have fluctuated in the North, this latest investor sentiment survey shows that amid economic downturn and recovery, investors are reassured by the maturity and stability of the UK market."Mr Robb added that in order for the UK market to further extend its attractiveness to financial services, it needed to continue broadening its service offerings around ESG, driving progress towards Net Zero, improving the skills levels of the UK workforce and "demonstrate progress in the ‘levelling up’ agenda, so that more regions in the country benefit from what could be a boom in foreign investment and growth opportunities".

Read more news and views from David Sapsted.

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