All of UK profiting from finance exports

A new report has shown how exports by the financial services sector benefit the regions and nations of the UK, not just London.

David Sapsted

16 November 2020

The report from the sector's trade body, TheCityUK, said that, last year, financial services exports increased by 8.2 per cent, contributing £126.5 billion to the UK economy.And while London remained the epicentre for the majority of activity, the report also showed "financial services to be the biggest exporting service sector in every British region and nation apart from the South East and the East of England".In fact, almost half (48 per cent) of all financial and related professional services exports were generated outside of the City in 2019.Anjalika Bardalai, chief economist and head of research at TheCityUK, said: "This report dispels the common misconception that London sells financial and related professional services overseas and the rest of the UK focuses on domestic activity."The British financial services sector made a £56 billion trade surplus in 2018 and almost half of this was accounted for by regions and nations outside the capital.“Industry exports are likely to contract in 2020 as Covid-19 wreaks havoc on global and UK economies."However, the disruption caused by the pandemic does not alter the fact that regions and nations outside London – especially the South East, Scotland, North West, and Yorkshire and the Humber – make large contributions to the UK’s position as the world’s leading financial and related professional services net exporter.”The report showed that SE England was the largest financial services exporter outside the capital last year with the trade worth an estimated £10.7 billion. Next came Scotland with £9.2 billion in exports, and then North West England (£8.4bn).But it was Yorkshire and the Humber that experienced the strongest annual average growth between 2014-18 at 17 per cent, said the report. This was followed by the East Midlands (15 per cent), London (9 per cent), the North East and Scotland (8 per cent each)."To put this in an international context," TheCityUK said in a statement, "in 2019 Scotland’s financial services exports were equivalent to around 50 per cent of those of the whole of France, and the North West’s equivalent to around 45 per cent of French financial services exports, reflecting the UK’s status as the world’s second-largest exporter of financial services, after the US."Publication of the report comes at a nervous time for the UK's financial services, with the end of the Brexit transition period looming on December 31 and with London and Brussels still unable to agree on a subsequent trade deal.Last week, Chancellor of the Exchequer Rishi Sunak announced the UK government was taking regulatory decisions intended to ensure that EU-based exchanges, clearing houses and financial benchmarks could continue to be used by UK customers.Mr Sunak said these equivalence decisions, which effectively mirror EU regulations and financial supervision, would give the financial companies in both the UK and EU more certainty over trading arrangements come January 1.However, Brussels subsequently made it clear that it was unmoved by the British gesture with a European Commission spokesman telling the Financial Times that Mr Sunak's announcement "provides no further clarity on the UK’s possible divergence from EU rules going forward, or about the UK’s future supervisory practices”.He added: “The Commission’s equivalence processes are autonomous. We will consider equivalence decisions where they are in the EU’s interests."