Financial Services

Financial services underpin the health of the UK economy. They provide: the entrepreneurial capital to start new enterprises; the payment systems that are the DNA of the day-to-day economy; the finance packages that accompany the lease of vehicles, facilitate the manufacturing and shipment of export goods; the insurance of all our transportation and businesses; the consumer finance; mortgages for housing; the financing of the UK's infrastructure; and the management of savings and pensions for millions of people.
As the financial leader in Europe, the UK provides financial products and services to the EU and the rest of the world. It has the expertise and infrastructure to be a global centre of excellence – not just in London but across the UK.

Key stats

  • 1.1 million employees
  • £119.2 billion GVA (7.2% of total GVA)
  • £63.7 billion exports
  • £8.8 billion imports
EU Trade and Regulation: Easy trade with the European Union is crucial

It will be crucial for the UK government to secure the means of continued reciprocal access for financial services between the UK and the EU. This is not just important for the UK, but for the EU, with 8,000 EU firms selling financial services into the UK or operating within its hub. The FCA further reported that nearly 5,500 UK firms are providing financial services to clients within the EU and EEA [1] .

Third party access or regulatory equivalence alone is not enough to ensure the continuation of the smooth flow of financial services between the UK and EU, as it is a patchy system that poses the risk of being changed or even removed at any given point in time.

International: The UK's international reputation matters for financial services

It is paramount that the UK retains its attractiveness as a global financial hub from a regulatory, taxation and political perspective. The UK plays a key role in international regulation and expertise and the reputation of the UK as a place to do business and a hub for financial services is critical. So it is important therefore that the UK government and regulators continue to take an active role in EU legislation that is in development during the negotiation period. The UK must maintain its position as a global leader in, rather than a recipient of, financial regulations.

Migration: Continued access to skilled international workers is important for the financial services industry

It is important for the financial services sector that the UK government commits to an immigration system that attracts the best global talent. The international success of the sector is built on attracting global talent and an openness to the rest of the world.

Exit: The UK and EU would both benefit from temporary transitional arrangements in financial services

It will be important to secure agreed temporary transitional arrangements to allow both UK and EU financial services firms the time to adapt to any changes in our trading relationship. This time will ensure that all of our financial services firms will be able to continue to provide products and services to their clients – consumers and businesses in the UK and across the EU and EEA.

Early clarity that transitional arrangements will be developed for UK businesses across all sectors will provide the confidence to both UK and international financial services firms to continue operating their EMEA businesses out of the UK, whilst the exit negotiations are in hand.

Our members say

"UK financial services serves UK customers, EU customers and markets beyond such as US where non-EU business comes to London to access the EU. So UK losing access means other international markets losing access." - financial service infrastructure provider

"Anything that causes London to fragment, such as a loss of passporting, will results in higher costs, lower liquidity, more trapped capital and less-efficient capital markets." - global bank

"We are looking at wherever we have an office now, plus Malta and Luxembourg, which have good regulatory structures." - insurance Firm
Our partners have more information:
  • Association of British Insurers
  • British Bankers Association
  • British Venture Capital Association
  • Building Societies Association
  • Investment Association
  • TheCityUK

For financial services at the CBI, contact: Flora Hamilton on 0207 395 8153 or Flora.Hamilton@cbi.org.uk


References

[1] FCA letter to Rt Hon Andrew Tyrie MP, August 2016

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