Paul Manduca, Chairman of TheCityUK Advisory Council, delivered the speech below at this evening’s TheCityUK Annual Dinner 2019 at Plaisterers’ Hall in London.
The Chancellor of the Exchequer, the Rt Hon Philip Hammond MP, also spoke at the event, which was attended by over 300 senior guests from across the financial and related professional services industry, as well as diplomats, ministers, regulators, policymakers and other key stakeholders.
My Lord Mayor, Your Excellencies, My Lords, Chancellor, Ministers, Chancellor of the High Court, Aldermen, Sheriffs, Ladies and Gentlemen. A warm welcome to TheCityUK Annual Dinner. And a big thank you to Shearman & Sterling for sponsoring the dinner this evening. Your support is very much appreciated.
I would also like to welcome the Chancellor of the Exchequer, the Rt Honourable Philip Hammond MP. Appreciating how busy you are we tried to organise tonight’s dinner during a period of calm and tranquillity – so much for planning!
Throughout your tenure as Chancellor you have been a committed advocate of the financial and related professional services industry and the contribution we make to economic growth and society. We also recognise that you get less credit than you deserve for the support you give us. So on behalf of TheCityUK, thank you.
The Bank of England also deserves recognition for its efforts to ensure financial stability during a period of significant uncertainty.
The City started in the coffee houses of London – and people have always been at the centre of its success.
As the need for face-to-face contact has diminished TheCityUK has played a critical role in bringing executives together with our partners in governments and regulators around the world.
During the last three and a half years it has been a great privilege to work alongside my fellow Advisory Council members. Their contribution to our strategic thinking has been invaluable.
Our aim has always been to address the most important policy issues for our industry and to ensure our members are well informed with hard data. That data underlines the positive impact we as an industry have on the life of this nation.
Over 2.3 million people across the country work in our industry – with two thirds of those working outside London. Jobs in our regional and national financial centres are growing even faster than London – in the case of the North West by 14% in the last year.
Our contribution to the Exchequer was over £90 billion last year, which roughly equates to the entire education budget. Moreover, financial and related professional services provide £1 of every £10 of UK economic output.
We are Britain’s most successful exporter – with a trade surplus of over £75bn. We attract vital investment and business, with nearly 420 foreign companies listed on the London Stock Exchange.
The UK is at the forefront of the FinTech revolution. There are over 1600 FinTech companies operating in the UK and the Government estimates the UK FinTech market already generates £20bn of revenue. In the first half of 2018 UK FinTechs attracted £16bn of investment – more than any other country.
Our industry makes a huge difference to the lives of millions of people. Three quarters of households have savings managed by the UK fund industry.
Two thirds of the population have borrowed to buy a home. And our industry supports businesses – small and large – by lending over £465 billion.
We have a real social purpose but the process of rebuilding consumer trust is still underway.
While the UK has a long history as a leading global financial centre, and as Europe’s financial hub, our continued success is not guaranteed.
Our reputation for strong regulation, and governance, deep and robust capital markets and excellence in legal services makes us the natural financial centre in Europe. But despite these hard earned advantages, any disruption to our ability to trade puts this at risk to the detriment of both the UK and Europe.
We know markets take a long time to move elsewhere, but alongside the risks associated with Brexit, the large financial centres in Asia are rapidly emerging as genuine contenders to compete with us and New York.
In the past we have remained competitive because we have innovated and adapted to change. The emergence in the 1950s of the Eurodollar market in London is a good example of this. That market, centred in London, is now the biggest source of global funding. Since then we have had Big Bang, the dot-com bubble and the recent financial crisis, from which we have emerged stronger and better capitalised.
Now with Brexit we face another major challenge. For the last two years, our industry has been focused on continuity of service to our customers and clients. We have worked closely with government and regulators to achieve this.
Whatever the outcome of Brexit there are four things this industry and the wider economy will need to succeed: investment, infrastructure spend, skills and innovation.
On investment, creating a stable and welcoming business environment and globally competitive tax system will provide firms with the confidence they need to invest.
On infrastructure, we must continue to renew and expand our existing network while creating the digital infrastructure of the future.
On skills, we will work in partnership to equip young people with the training they need to thrive in tomorrow’s economy. And we should also ensure that our industry redoubles its efforts to fully reflect the diversity of the communities and customers that we serve.
On innovation, we are all embracing the rise of AI and emerging digital technologies. That will ensure that we grasp the enormous opportunity in front of us.
However, this industry has been consistent about what it needs in the short term from government to secure its future.
First, we want markets to continue to operate smoothly, without disruption. As we get closer to March 29 the need for clarity is becoming ever more urgent.
Secondly, we want market access for both the UK and the EU that has more depth and certainty than the existing equivalence regime. This will require the right regulatory oversight to ensure we have close cooperation between regulators, central banks and authorities. Any new arrangements should be as robust as the EU regime that we have helped build as members. But we must also have the flexibility to ensure our regulatory system reflects the unique aspects of the UK economy and the global opportunities ahead.
Thirdly, we require continued access to the international talent and expertise that is so fundamental to the continued success of our industry and the UK’s position as an international financial centre.
Chancellor, we know that expanding our domestic talent pool is a particular focus for you. We are supporting you on your Financial Services Skills Taskforce and want to help you to build the long-term pipeline of talent we need to remain globally competitive.
However we also know that over 1 in 4 employees in banking and finance in London are non-UK citizens, with the majority filling UK skills shortages.
Finally, the development of new and deeper trading and regulatory relationships with countries across the globe will play a key role in driving future growth.
Chancellor, TheCityUK strongly supports your Global Financial Partnerships initiative and the industry looks forward to working with government and regulators to make this a reality. This will require significant investment in capacity across government, a strong international diplomatic presence, and openness to investment from the rest of the world.
I know that you and your colleagues share our aim to ensure that UK-based financial and related professional services continue to be successful. There will undoubtedly be challenges ahead to achieve our goals, but we have strong foundations, a world-renowned ecosystem, and a deserved international reputation for cutting edge innovation.
We look forward to working with you, in partnership, to secure a strong future for our industry in the years ahead.
I would not want to finish my remarks this evening without recognising that this is the last Annual Dinner as Board Chairman for my colleague, John McFarlane.
John, you stand down from TheCityUK later this year, but I want to take this opportunity to thank you on behalf of all of us for your service to the industry, both to TheCityUK and to financial services over the course of a distinguished career.
It is now my pleasure to hand over to our guest, the Chancellor of the Exchequer.