Ahead of the Autumn Statement, TheCityUK is calling for the Chancellor to support the UK-based financial and related professional services industry through the current period of uncertainty to ensure its continued strong contribution to the economy.
In its Autumn Statement representation to HM Treasury, TheCityUK has focused on four key areas where practical measures could be taken to bring greater market stability and ensure strong economic growth. These include:
- Regional investment: Ensure prosperity is better shared throughout the regions and nations of the UK by investing in the UK’s increasingly important regional financial centres.
- Caution on tax policy: The Government should proceed judiciously with current and further reforms to tax policy to minimise ongoing uncertainty.
- Access to skills: Maintain the competiveness of the UK labour force with continued access to deep pools of global talent and expertise.
- Ensure a smooth Brexit: Stabilise financial markets and minimise uncertainty throughout the Brexit process and secure an agreed transitionary period as soon as possible.
Miles Celic, Chief Executive, TheCityUK, said:
While the long-term impact of Brexit will depend on the nature of the final deal, any uncertainty and volatility would make for a challenging business environment. This Autumn Statement should aim to bring greater market stability and deliver clarity where possible. It is also a prime opportunity to reinforce the fact that Britain remains open for business, and that we can make the most of the opportunities which lie ahead.
The UK-based financial and related professional services industry is a major national employer, providing jobs for nearly 2.2 million people – two thirds of which are outside the M25. TheCityUK members employ significant numbers of people in cities and towns across the country. However, banking and insurance employment across the UK has declined since 2010, with areas outside London experiencing a drop of around three per cent annually. Brexit could pose further challenges to the regions, for example through the reduction or elimination of access to the European Regional Development Fund.
TheCityUK proposes the Government accelerates its efforts to build local capabilities to support regional innovation and growth. Specific actions could include continuing to invest in regional infrastructure, incentivising the commercialisation of university researchers’ innovations, creating joint appointments in industry and academia, and building initiatives to provide start‐ups and SMEs with access to technical expertise.
Caution on tax policy
Demonstrating that the UK remains open for business and is an attractive place in which to base operations will be critical to sustaining growth and job creation throughout the Brexit process. Clarity and stability of the tax system is essential and TheCityUK urges the government not to introduce any sensitive tax changes in this period.
Where particular sectors are already being affected, it does not feel like the right time to introduce additional major tax changes which exacerbate this and impact negatively on UK competitiveness. A period of reflection and consultation on tax measures with potential unintended consequences would be welcomed in the current environment.
Access to skills
The UK‐based financial and related professional services industry has benefitted hugely from the ability to attract the best employees from around the world at different stages of their career. It has allowed the industry to grow nationally to the point where it accounts for 12 per cent of UK GDP. The industry recognises it has an important role to play in developing domestic talent and it has made a strong contribution by providing training and apprenticeships and supporting lifelong career development. Its competitive advantage will be weakened if expertise in new technologies and international markets is diminished through limits on skilled migration.
TheCityUK believes that the Government and industry must work together to agree an approach to the retention, sourcing and movement of skilled talent between the UK, the EU and internationally. Additionally, there must be a collaborative approach taken to address bottlenecks in skilled labour more broadly. This is particularly important for the fast‐growing, high‐value areas of technology and FinTech.
The Government could facilitate the availability of the needed skills by, for example, ensuring that technology talent is on the Shortage Occupation list for Tier 2 visas, reducing visa restrictions for entrepreneurs and foreign technology students, and instituting a scheme that allows UK‐qualified foreign graduates in technology to work in the UK. This should come alongside increased investment in UK skills development.
Ensure a smooth Brexit
An orderly Brexit is essential for financial stability in both the UK and the EU‐27, as well as for the global economy. UK, European and global companies look to the UK-based financial and professional services industry for capital‐raising and expert advisory work. The Government should continue its focus on policies and clearly‐calibrated courses of action that will be conducive to stabilising markets over the long term.
Firms want to see agreement on long-term trading arrangements secured as soon as possible in order to deliver stability and minimise disruption to their ability to provide products and services to customers and clients. Clarity is needed not only on the shape of these arrangements, but also on the timing. The longer the period of uncertainty, the greater the likelihood that individual firms will feel compelled to review the structure of their business operations.