UK net exports of financial and related professional services grew by around 5% to an estimated £82.8bn in 2018, up from £79bn in 2017, according to a new TheCityUK report, ‘Key Facts about the UK as an international financial centre 2019.’
About a third of this growth (£1.1bn) came from financial services, and two thirds (£2.7bn) from related professional services like accounting, legal services and management consultancy.
The UK remains the world’s leading net exporter of financial services (£61.9bn), followed by the US (£47.3bn) and Switzerland (£17.5bn). As a single country, the US accounts for the largest part of the UK’s financial services net exports, at 26.6% of the total, with the EU as a bloc accounting for the largest part overall (40.5% - with the Netherlands 8.4%, Germany 7%, and France 6.7% being the top three destinations in the EU).
The UK also increased its global market share in key financial markets, including interest rates OTC derivatives (to 50% from 39%) and foreign exchange turnover (to 43% from 37%) during the period 2016-2019. In both cases, the UK remains the global market leader by a considerable margin.
Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK, said,
The UK has a leading position in many international financial markets, such as foreign exchange trading, cross border bank lending and international insurance premium income. Metrics such as these are a testament to the UK’s global competitive advantage in financial services, and this report demonstrates the country’s role as the world’s most internationally-oriented, full-scale hub for such services.
“The UK’s strength in this area is derived not only from the high volume and value of transactions, but also the breadth of services and expertise available—the ‘ecosystem’ effect. This ranges from green finance to Islamic finance to maritime business services, and is supported by an extensive network of professional services related to financial services: legal, accounting and consulting.”
Additional key facts from the report:
- Around 2.5 times as many dollars are traded in the UK as in the US. Overall, the UK has 43% of the global total of foreign-exchange turnover.
- The UK legal services sector is the largest in Europe and 2nd-largest globally. At £35.1bn, UK legal services revenue accounted for 5% of the global total in 2018.
- The UK insurance sector is the biggest in Europe and 4th largest in the world. UK insurance premiums represented 22.5% of European premiums and 6.5% of global premiums.
- London’s importance as a centre for global equity trading is illustrated by the 418 foreign companies listed on the London Stock Exchange (LSE) at the end of 2018, accounting for 11.5% of total global foreign listings. The LSE had a 4.9% share of global equity market capitalisation and 2.6% of global equity trading by value. The UK’s equity market capitalisation-to-GDP ratio is one of the highest among G7 countries, at 129%.
- The UK is one of the largest markets in the world for fund management, behind only the US. UK assets under management totalled a record $12.1trn (£9.1trn) in 2018, and the sector has a strong international orientation.
- The UK plays a leading role in a number of specialist areas of financial services. Green finance, Islamic finance and maritime financial services are all sectors where the UK has been at the forefront of development.
- London’s role as the world’s leading international financial hub and the presence of a strong and fast-growing technology sector have helped boost the UK’s position as a global FinTech leader. The UK FinTech market is now worth £7bn to the UK economy and employs 60,000 people. The average amount of capital UK FinTechs received from investors was £20.1m in 2019, up from £15m in 2017.
- The UK is a major centre for the professional services that support financial services, such as legal, accounting and management consulting. Together, these sectors comprise the financial and related professional services industry.