Financial and related professional services fuelling UK growth and productivity

The UK-based financial and related professional services industry is fuelling economic growth and productivity according to the latest annual key facts report from TheCityUK.

Across the country, 1 in 14 UK-based workers (2.3 million people) work in financial and related professional services – two thirds of whom are outside London. Financial services jobs have the second highest level of productivity, twice as high as the whole-economy average in terms of output per-job [2].

As well providing high-productivity, high-value jobs, the financial services sector remains a vital source of tax receipts, accounting for £11 in every £100 of tax paid to the exchequer, a total of £75bn in 2017/18, equivalent to 45% of the total health budget.

Financial services also generated the largest trade surplus of any UK industry, £60.9bn in 2017 – almost as much as the trade surplus in financial services of the next three leading countries (U.S. Switzerland and Luxembourg) combined.

The UK has one of the largest and most developed markets for professional services, including legal services, accounting and management consulting. These three sectors contributed £26.8bn, £20.1bn, and £14bn respectively to UK economic output in 2017.

Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK, said,

This report is an essential collection of facts and statistics which demonstrate how the financial and related professional services industry is powering the wider economy.

"If the UK economy is a bus in which we are all traveling, our industry is the person putting the fuel in the tank, and helping the driver and other passengers map out where they want to go and how best to get there. Each year it helps millions of people to set up their own businesses, buy their own home and save for the future. It is an industry which is essential to helping firms of all shapes and sizes to manage their risk, raise capital, and plan out future investments.”

The UK Key Facts report also shows that in recent years the industry has been making multi-billion pound investments to enable customers and other businesses to take advantage of digital innovations such as internet banking, contactless payments, Law Tech and the use of AI.

In Great Britain, the use of online banking has increased by 34 percentage points in the last 10 years, up to 69% of the population in 2018. The use of contactless payments was up 97% year on year, reaching 5.6 billion payments in 2017.

The industry also supports small businesses. The outstanding loans made available by the UK’s leading banks to SMEs reached £166bn by the end of 2018, out of a total £477bn in loans made to all UK businesses.

Alternative finance and private equity are also playing an increasing role in small business finance. In 2017, 29,500 SMEs received £4.2bn worth of funding from alternative finance providers. Also, in 2017, UK private equity funds invested £22.2bn in 1,030 UK companies, bringing both finance and business expertise to promising UK businesses with the capacity to grow and innovate.