The UK leads European finance

Last week TheCityUK organised a post-Referendum member briefing to provide an update on developments since the vote.

The briefing also served as the launch event for our new report highlighting the extent of financial and related professional services trade and investment between the UK and Europe.
Our research shows that the UK and the rest of Europe benefit from the UK’s position as Europe’s leading financial centre. Our research illustrates this mutually beneficial relationship through data in areas like the UK’s share of European financial and related professional services business; European businesses’ presence in the UK, and the strong demand in the rest of Europe for UK financial services exports.

Pie charts

The UK has the world’s largest trade surplus in financial services, totalling more than £50bn, which provides support to the overall balance-of-payments position by partially offsetting the roughly £120bn deficit in goods trade. And the EU accounts for around 40% of this surplus. While the US is the biggest single contributor to the UK’s financial services trade surplus, France, Germany and the Netherlands feature most prominently within the 40% that’s accounted for by the EU.

We’re currently undertaking additional analysis on trade patterns with key countries. The full findings and analysis will be published in the months ahead, but one interesting finding that has already emerged is that the growth of the UK’s financial services exports to the rest of the EU has been very rapid—an increase of 165% overall between 2005 and 2015—from a high base (£10bn in 2005). Looking at overall trends, the weight of financial services exports has increased over this period—they represented around 12% of total UK exports in 2015, up from around 7% in 2005.
Looking at investment, a similar picture emerges: financial services plays a critical role in attracting investment into the UK, and European investment has been particularly robust. Out of around 1,000 companies in the UK with foreign majority ownership, nearly half are from the US—but another fifth or so are from the EU—mostly from France, Germany and the Netherlands (and another 7% are from elsewhere in Europe).
Our new researched is data-focused, letting the figures speak for themselves—but the story they tell is of an unambiguously symbiotic relationship.