- TheCityUK and PwC UK report urges for bolder ambition and faster, more decisive action to secure financial and related professional services’ competitiveness in the next decade and to drive investment and growth.
- With a decade of expected geopolitical turmoil and technological change ahead, the report calls for the UK to reinforce its status as an open, internationally connected financial centre.
- Delivering this could see the industry generate an additional £53bn in annual economic output by 2035 – the equivalent of adding a city almost the size of Edinburgh and Glasgow combined to the UK economy each year – with benefits including deeper domestic investment and more financially resilient households and businesses.
- Industry leaders are clear: the UK must lead the world in tokenised, and AI enabled financial markets or risk areas of historic UK strength.
TheCityUK and PwC UK have published a landmark report setting out the actions needed for the UK to lead in the next era of global finance.
The report, ‘No time to lose: Reasserting UK leadership in financial and related professional services’, is based on one of the largest industry listening exercises in years, drawing on engagement with over 300 senior leaders across industry, government, regulators and academia –– and underpinned by new economic modelling and international benchmarking from PwC.
Those interviewed were clear: while the increased focus from government and regulators on growth is welcome, bolder ambition and faster, more decisive action to reform the financial system and reinforce the UK’s global reputation for legal certainty is needed. Without this, the UK risks ceding unrecoverable ground to competitor financial centres who are investing heavily in digital market infrastructure, accelerating regulatory and tax reform, and using targeted incentives to attract capital, talent and innovation.
The impact of moving slowly is already being felt. While insurance and professional services are outperforming, overall industry growth has flatlined over the past decade, with real growth averaging just 0.1% a year since 2014 and productivity falling sharply. New PwC economic modelling suggests that, on current trends, the industry could grow at only 0.5% a year in real terms through to 2035, steadily eroding the industry’s share of the UK economy and limiting its capacity to support households and businesses through lending, insurance and investment services.
But the upside from acting decisively is substantial, with PwC modelling showing that the UK could unlock over £53bn in additional annual economic output and £22bn in additional annual tax receipts by 2035 – c.£770 per household. The benefits would also be felt across the wider economy, with the UK having direct access to scarce global skills, specialist expertise and deep pools of capital to support national priorities such as infrastructure, defence, energy security and high-growth businesses.
What is needed now
Interviewees stressed that wholesale markets – the foundation of the industry’s strength and impact in the UK – must be a priority. As geopolitics, regulatory divergence and rapid advances in AI and tokenisation reshape capital flows, talent location and customer expectations, the UK must build on recent announcements and act decisively to stay ahead. Delay of even one or two years risks irreversible loss of activity and advantage.
The report identifies five critical imperatives for action, with a series of recommendations for industry, government and regulators to collectively deliver (detailed on p6 of the report):
- Lead at the frontier of financial technology
- Lead the world in tokenised assets - decisive leadership, a confident tone from the top, regulatory and legal certainty, and live use cases are needed to protect UK leadership in trading, fund management and market infrastructure.
- Accelerate rollout of a consumer-friendly digital and corporate identity for financial services - Government, regulators and industry must work together to deliver a universal, consumer-friendly digital and business identity for financial services that reduces costs and improves access.
- Digitise broken processes - such as homebuying and SME lending, to boost productivity, reduce costs and directly support wider government objectives. The government must make this a priority, use its convening power to set the guardrails, mandate digitisation and standardise access to its data.
- Reset regulation and tax for the future of finance
- Restore predictability and competitiveness on tax – Set a long-term tax strategy focused on stability, simplification and targeted incentives to restore confidence and unlock investment.
- Adopt a more proportionate approach to wholesale regulation - Post-crisis reforms strengthened resilience but have left wholesale regulation overly complex and costly. The UK must match the pace of reform seen elsewhere and adopt a much more differentiated, proportionate regulatory framework tailored to wholesale and specialist markets.
- Radically simplify regulation, supervision and governance - UK regulators must deliver faster authorisations and streamlined processes; the government must provide consistent air cover for regulators and tolerate proportionate risk, including recognising the risk of failure to give firms the confidence to innovate; while firms must simplify their own internal data and streamline governance.
- Deepen international trade and investment
- Put financial services at the centre of the UK’s trade strategy - Financial services, data flows and regulatory cooperation must sit at the heart of trade agreements and economic diplomacy, and there must be greater coordination to actively champion the UK internationally and attract investment.
- Make it easier to attract and retain global talent - The UK must streamline routes for high-value talent and entrepreneurs and provide a stable, predictable tax and mobility environment to remain attractive.
- Connect capital with national priorities
- Strengthen and consolidate public financial institutions - UK pensions and long-term savings remain under-allocated to UK, high growth and alternative assets, in comparison with international peers. Accelerated consolidation and public financial institutions with greater scale would partner more effectively with private capital and help unlock billions in productive investment.
- Build a nation of investors
- Increase engagement and innovation to build a nation of investors - Sustained reform across advice, communications, financial education, tax incentives and product innovation is needed to shift behaviours and build a durable investor culture.
Anne Richards DBE, Chair of Project Steering Committee and Chair of TheCityUK Leadership Council, said: “The UK’s financial and related professional services industry is a strategic national asset that cannot be taken for granted. While professional services and insurance are outperforming, the industry’s growth overall has flatlined. We are at a critical juncture. The message from industry leaders and stakeholders is clear: build on the positive approach in place to reform the system, but do it faster, with greater ambition and with targeted execution.
“It has never been more urgent for industry, government and regulators to act together to unlock growth and drive innovation. This is an industry that delivers value right across the economy and society. If successful, the UK will become more competitive and appealing for investment, businesses, and talent, benefitting people nationwide."
Darren Ketteringham, UK Financial Services Leader, PwC UK, said: “Our financial and related professional services industry is built on qualities others strive to emulate: deep expertise, openness, and a relentless ability to reinvent. It is more than an industry in its own right; it is a multiplier of opportunity that fuels growth across the whole country. But our modelling is unequivocal. Without substantive action, the UK’s financial services industry will shrink as a proportion of national output.
“Other financial centres are closing the gap with the UK and technology has reset the terms of competition. Industry leaders are clear. We must make bold decisions now on how we harness technology before others who are moving with greater ambition and speed to lock in a competitive advantage. Adopting AI, leading on tokenisation and building the market plumbing to underpin this will be critical to securing the UK’s position as a leading financial centre for decades to come.
“Staying ahead requires constant transformation and this is a make or break moment. With shared clarity and confidence in the path forward, we can unlock the £53 billion economic opportunity and put the UK decisively back at the frontier of global financial services.”
Lucy Rigby KC MP, Economic Secretary to the Treasury, said: “The UK’s financial services are the jewel in our economic crown. This Government’s ambitious reform agenda is designed to unleash the full potential of the sector including by ensuring regulation is fit for purpose, backing innovation and ensuring that we retain our competitive edge. I welcome this report from TheCityUK and PWC - it's urgency and ambition is a shared one across both Government and industry.”
Simon Westcott, Strategy& Financial Services Leader, PwC UK, said: “Financial markets of the future will run 24/7, cost less to access, settle instantly and open up far more opportunities for people and businesses. Imagine buying a home in days rather than months, automatically getting the best rate on your savings, or being able to invest in any asset in seconds."
"To get there, firms need to invest now in the technologies that will power this next generation of finance. Industry is clear: the systems behind this must work seamlessly together - at home and across borders. We need joined‑up connections between industry, government and regulators to build infrastructure that speaks the same language internationally."
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