To tackle the challenges of our age, UK and EU finance firms must work together
The economy is a hot topic this election campaign, but one issue which is attracting little attention so far is the value and significance of financial and professional services.
According to new data from the Office for National Statistics, the UK exported £82bn of financial services last year, up £4bn on 2017. This gives us the biggest financial services trade surplus globally at £63bn, and has helped cement our place as a leading international financial centre.
Much of this rise was due to increased trade with our partners across the world, including the US (£21.7bn), Japan (£4.4bn) and Canada (£2bn). In fact, overall trade with non-EU countries as a whole rose from £47.6bn to £49.6bn, providing the finance and services needed by our international partners.
It’s not just London that is behind this growth. Regional hubs up and down the country are playing a crucial role in driving financial services exports. In Edinburgh, for example, they accounted for almost half of all its services exports in 2017, while in cities like Birmingham and Leeds, financial services amounted to close to 40 per cent of all their services exports.
But what’s particularly telling from the statistics is the growing trade with the European Union, our closest neighbour and by far our largest partner in financial services. Financial and professional services exports to the EU rose nearly £3bn to £32.6bn in 2018, with the overall share of UK financial services and insurance exports going to this market climbing to 40 per cent of the whole.
Amid all the debate about Brexit and the future EU-UK relationship, this is an important statistic to remember, especially given the challenges that both sides must face.
I spoke last week to European Commission vice president Valdis Dombrovskis, who was in the Square Mile to talk about the importance of EU-UK cooperation, particularly in sustainability and green finance. These two topics are vitally important for both sides, and whatever happens with Brexit, we will need continued cooperation and engagement between the UK and the EU on many shared challenges, including green growth.
Tackling climate change requires international partnership. And if we want the City to become an engine of the UK’s transition to a low-carbon economy — a global hub not only for green investment, but also for green arbitration, accounting, and technology — we will need new forms of cross-sector and cross-border collaboration.
That includes the removal of barriers to investment, and ultimately the redirection of more private capital towards climate change mitigation and resilience.
A welcome signal of intent on future collaboration was given by Dombrovskis’ announcement at Guildhall that he will propose an extension of temporary equivalence for UK clearing houses. This is encouraging news for the central counterparty clearing houses and their customers across the EU, and would help to remove the immediate risk of disruption to EU clearing services.
Whatever the outcome of this election or of the Brexit process, out EU neighbours will remain crucial partners as UK financial and professional services firms work together to tackle global challenges and deliver a sustainable future.
Main image credit Getty