Thank you, Sandy, and good morning, everyone.
Welcome to TheCityUK and SFE National Conference, supported by our sponsors PwC and State Street. It is wonderful to see so many of you here in person, at such a historic venue.
Our location, in the middle of George Street, seems ideally situated as a place to bring together the collective wisdom of the entire financial ecosystem today.
To the East we have St Andrew Square, with its long history of banking and insurance services. To the West we have Charlotte Square, the birthplace of Scotland’s investment trust industry.
So, we are perfectly balanced between assets and liabilities, investment and borrowing, and risk and return. And we are similarly poised between the old year and the new, making it an ideal time to look back on the past year, and forward to the next one.
I think, if we had to use one word to describe the last 12 months, it would probably be: polycrisis.
Our various challenges - economic, climatic, political and geopolitical to name but a few - have not only arrived at the same time, but seem also to add up to something that appears greater than the sum of their parts. these challenges will continue into 2023, testing our creativity and resilience.
Ralph Waldo Emerson, the 19th century transcendentalist, said: “Money often costs too much;” Which is something we are certainly rediscovering in an era of rising interest rates.
With the current cost-of-living challenge and an uncertain economic outlook, this is the moment for our industry to be at its best, supporting the people, families and organisations that rely on our services.
Our industry has been there for people in the past, helping them save for the future, protect against risks and make new business ideas a reality.
These activities have, over centuries, built an industry at the heart of the UK economy, an engine of our collective national success.
Finance, and its related professions, now employs 2.2 million people across the UK, adding a gross value of 238 billion pounds to the economy.
No wonder, then, we have been described as the jewel in the crown of the UK’s export base, generating a bigger trade surplus than all other exporting industries combined. And it is a jewel with many facets.
Manchester, Leeds, Bristol, Cardiff, and London to name some south of the border. London is the base for some 57 per cent of the industry’s exports, and around a third of its workers but well over 40 per cent of exports are attributed to the other regions and nations of the UK.
Edinburgh, Glasgow and Aberdeen, in particular, play a key role in this ecosystem. And if we measure creativity in firsts, and resilience in years, then it’s clear Scotland excels at both.
The Bank of Scotland was established in 1695, not to supply the Government with credit, as was the case with other national banks, but to meet the needs of households.
Just over 50 years later, the Scottish Ministers’ Widows Fund was founded, to become the first company ever to provide life insurance.
And today, centuries later, Scotland is home to more than a fifth of UK-based funds under management.
Its financial sector employs 145,000 people, contributing almost 14 billion pounds to the Scottish economy, according to TheCityUK’s latest report.
Overall, our industry operates in every region and major city of the country, underpinning much of Britain’s economy. This diversity gives us a unique strength with which to meet the challenges ahead.
And we will need to draw on all of this strength to confront, not just the urgent issues, but also the existential ones. These are broadly:
The need to attract, train and retain the talent that will drive our future success
The funding and development of new technologies
And climate change and the drive towards net zero.
First, the work of our industry takes place in the minds, spreadsheets and meetings of finance workers across the UK. And so, any solution must start with people, and our ability to provide the training and skills to keep pace with a changing world.
Our industry is a hotbed of genius. To keep it that way we must make sure that talent, spread throughout the country, has the opportunity to rise and thrive, helping people from all walks of life reach their potential.
Access to education and training is vital because education leads to innovation. And the finance sector plays a central supporting role at every step in the cycle of technology and growth.
From early-stage funding to leading companies through to the public markets as they mature, all helped along by legal, accounting and audit services. We all benefit if the right type of funding comes through at the right time.
In particular, we must focus on industries such as biotech, climate tech and digital services, making the most of our regional centres of excellence, to ensure our industry can support the economy of the future.
These advances will help us in the push towards net zero, which will not be a smooth and linear one. There is general consensus on the end state of where we want to reach, but the path of that transition is hotly debated and disputed.
We need to find a closer consensus on that transition and cooperate to make it a reality. Changing an energy system that dates back to the Industrial Revolution will take another, clean revolution of equal force.
New businesses and technologies will need funding, and finance metrics themselves will evolve as we learn how to account properly for climate risks.
In all, answering these complex questions will require a strategic response, built on a close working partnership between industry, government, regulators and regions, to create a new policy framework for investment and innovation.
The world will not wait for us. And we have already seen this year just how quickly events can move.
The conference today marks a moment to reflect on how we make decisions, and how we can adapt to this increasing speed of change.
Our stakeholders require us to be more agile, more flexible and more targeted in our response.
Whatever form this rethink takes, it must account for the many geographical facets of our industry and their potential to add value to the economy.
For example, decisions on skills policy and funding could be made quickly at a regional level, by those who are best placed to know what their area needs.
Ultimately, a polycrisis requires, for want of a better word, a “polyresponse.”
One where we all combine to be greater than the sum of our parts.
That’s what the discussions at today’s national conference are all about.
How can we, from all parts of the UK, from all parts of the industry and from all parts of government, come together to best support our customers, co-workers and communities in difficult times.
This ecosystem of ours is rich, complex, interconnected and mutually reinforcing.
I look forward to working with all of you on making the most of it and I wish you a fruitful conference.
Thank you for listening, and I’m delighted to now hand over to Andrew Griffith MP, Economic Secretary to the Treasury.