LONDON - TheCityUK is the industry-led body representing UK-based financial and related professional services. We champion and support the success of the ecosystem, and thereby our members, promoting policies in the UK, across Europe and internationally that drive competitiveness, support job creation and ensure long-term economic growth.
The industry contributes 12% of the United Kingdom’s (UK) total economic output and employs over 2.2 million people, with two thirds of these jobs outside London. It is UK’s largest net exporting industry and generates a trade surplus exceeding that of all other net exporting industries combined.
It is also the largest taxpayer, and makes a real difference to people in their daily lives, helping them save for the future, buy a home, invest in a business and protect and manage risk.
The central role of UK financial and related professional services
The UK is a major global hub for international wholesale finance, and as such, the financial and related professional services industry is a strategic national asset for the UK. The UK’s financial and related professional services industry employs 2.2 million people across the country, two thirds outside London; generates large tax revenues; and contributes to a major trade surplus in services. It has also secured striking levels of inward investment to the UK, helping to fund businesses across the country, and positioned the UK as a key hub for strategic, forward-looking industries like technology and life sciences.
The leading net exporter of financial services across the world
The UK’s financial services trade surplus totalled $87.2 billion (equivalent to £63.7bn)2 in 2021—slightly higher than that of the US ($85.6bn)3 ; for more information see Figure 1. When the estimated trade surplus for related professional services – legal services, accountancy and management consultancy – is also taken into account, the industry total figure climbs to around $110.9 billion (equivalent to £81 billion).
The UK’s largest trading partners in financial services are the US and EU member states. The US and EU combined account for 63.1% of the UK’s total financial services exports.
The UK has a strong record in managing financial and related professional services business from developed economies. Developing economies also require financial services to achieve further progress in industrial development, infrastructure investment, poverty reduction and promotion of financial inclusion.
The volume of trade with these countries has significant potential for growth due to the rise in the importance of emerging markets to the global economy. The UK has been able to support them through its leading role in many international financial markets.
One of the top-ranked global financial centres
London is generally considered one of only two full-scale international financial services hubs globally—the other being New York. For example, according to Z/Yen’s Global Financial Centres Index7, a widely accepted source for ranking financial centres globally, London currently ranks second as an international financial services centre, after New York. Similarly, the UK ranks second, after the US, in the Global Financial Centres Index published by New Financial.
London’s role as a hub is based in large part on the co-location of banking, insurance, fund management, securities, derivatives, foreign exchange expertise, and skilled labour, along with its developed market infrastructure and clusters of related professional services (legal, accounting and management consulting) excellence.The number of financial centres conducting international business is growing.
While London and New York are long-established international financial centres, Asian centres such as Hong Kong, Shanghai, Singapore and Tokyo have evolved into well-developed global and regional hubs with deep and broad markets. Additionally, there are a few relatively broad but smaller international markets such as Frankfurt, Seoul and Washington DC, as well as a number of global specialist markets, such as Dublin and Luxembourg. A well-targeted specialist or regional offer can bring success for emerging international financial centres as they seek to develop niches or provide a particular set of products.
Executive summary
• The UK is one of the world’s leading international financial and related professional services hubs, with London central to this position. This report uses the latest available annual data to highlight a number of measures and markets that demonstrate the UK’s role as an international financial centre.
• TheCityUK estimates the UK’s trade surplus in financial and related professional services to be $110.9 billion (£81 billion). The magnitude of exports relative to imports indicates that the industry is highly competitive globally.
• The UK maintains a globally leading share of a number of financial markets; for example, it had 15% of the global total of cross-border bank lending in the second quarter of 2022. London is a centre for foreign banks, with around 180 foreign banks or branches in the city.
• Around twice as many US dollars are traded on the foreign exchange market in the UK than in the US. Overall, the UK has 38.1% of the global total of foreign-exchange turnover.
• The UK insurance sector is the biggest in Europe and fourth largest in the world. UK insurance premiums represented around one-quarter of premiums in advanced European economies.
• London’s importance as a centre for global equity trading is illustrated by the 333 foreign companies listed on the London Stock Exchange (LSE) as of September 2022 – more than on Euronext, but less than on the Nasdaq and New York Stock Exchange.
• The UK has one of the highest equity market capitalisations in relation to GDP among the largest countries –108.6% at the end of 2021. The LSE had a had a 3.0% share of global equity market capitalisation as of October 2022 (compared with 3.1% as of October 2021).
• London is the world’s second-largest centre for hedge fund management, after New York. The UK had around £350 billion ($480 billion) in assets under management (around 10% of global assets) in the hedge fund sector in 2021.
• The UK private equity market is the most developed in the world outside the US. UK private equity funds invested $37.8 billion (equivalent to £29.5 billion), the largest amount in Europe, in 2021.
• The UK plays a leading role in a number of specialist areas of financial services. Green finance, Islamic finance and maritime financial services are all sectors where the UK has been at the forefront of development.
• London is considered to have the second-best FinTech ecosystem globally, after San Francisco, and as one of the sector leaders, it offers a wealth of talent and expertise. As of 2021, there were 1,600 FinTech companies in the UK, and this number is projected to double by 2030. The UK FinTech sector registered record investment of £27.6bn (equivalent to $38bn) in 2021, seven times more than in 2020.
• The UK is the largest legal services market in Europe and is second only to the US globally. It accounts for a third of Western European legal services fee revenue and around 5% of global legal services fee revenue.
• A range of UK-based organisations provides education and training in financial and related professional services internationally. Three UK universities are part of the global top 10 higher-level institutions specialised in Accounting and Finance course
