Competitiveness report sends policymakers clear pre-election message

A new report, released today by TheCityUK, reveals that the UK continues to consolidate its important role as a truly international, world leading financial centre – but sends a clear message to the next government that when it comes to maintaining competitiveness, it cannot afford to drop the ball.

The UK’s Competitiveness as a Global Financial Services Centre report analyses the drivers of competitiveness against other leading financial centres as well as UK financial services business volumes.

According to the inaugural issue, a supportive economic environment and continued steady performance of most key indicators underpin the UK’s current strong position. Credit availability and the high cost of London’s commercial rents are two factors highlighted as ones to watch in terms of having a potentially negative impact on the UK’s competitiveness.

Chris Cummings, Chief Executive, TheCityUK, said,

Whatever the outcome of the next General Election policymakers will need to work hard to protect and promote the UK’s leading export-earning sector, given the clear desire of other countries to lure business away. Time and again we hear from potential investors that they want to do business in the UK and the best way to attract them is to have business-friendly policies, firm but fair regulation, and tax regimes that are transparent, predictable and of course competitive. Despite the emergence of other global financial centres, it is welcome that the UK’s position as arguably the most truly international of all leading financial centres is holding strong. A strong economy and a strong financial and related professional services industry are undeniably linked.

The strength of the current supporting economic environment offers a clear competitiveness boost for the UK, however, complacency after the next election cannot be an option. While the UK’s advantages as an international financial centre are well-established – a strong, politically neutral common-law legal system, a central geographical location and a welcoming of foreign firms and investment among them – with an increasingly diverse range of global financial centres competing for business, there has never been a more important time to ensure the industry can operate in a supportive economic and policymaking environment.

Key data highlights from the report include:

  • The UK attracts more inward FDI than any other country in Europe, indicating the confidence of foreign investors in the UK economy. The financial services sector accounts for almost half of all FDI flows to the UK.
  • In Q4 2014, financial services firms in the UK reported a continuing improvement in business volumes, with the financial services trade surplus rising to £16.1bn in Q3 2014
  • The UK alone accounted for more than 25% of European IPO activity in the third quarter of 2014
  • M&A activity in the UK surged in Q3 2014, rising by 85% quarter-on-quarter and by 40% year-on-year
  • The Office vacancy rate in the City of London remained flat in Q4 2014 at 6.1% – the lowest since the start of the economic slowdown, indicating a strong recovery in the demand by businesses to have a physical presence in London

Mr Cummings concluded,

Regardless of the political outlook of the next government after May’s General Election, ensuring the competitiveness of the UK is essential. We need to ensure that the UK continues to attract overseas firms, foreign direct investment and the best talent by sending a clear message that it is a genuinely competitive and world-leading place to do business. There are a range of measures that can help achieve this, including better regulation, greater ease to do business and ensuring that any new policy or regulation is considered through a lens of competitiveness and with job creation and growth in mind.

To download a copy of the report, please click here.