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This paper provides information on the economic output of the financial services sector and international comparisons; the number of jobs in the sector; statistics on the sector’s exports and imports; and the amount of tax it contributes to the Exchequer.

In 2019, the financial services sector contributed £132 billion to the UK economy, 6.9% of total economic output. The sector was largest in London, where half of the sector’s output was generated.

The UK financial services sector was the ninth largest in the OECD in 2019 by its proportion of national economic output. Luxembourg’s financial service sector was the largest in the OECD, contributing 27% of the country’s economic output.

There were 1.1 million financial services jobs in the UK in Q1 2020, 3.2% of all jobs.

Exports of UK financial services were worth £60 billion in 2019 and imports were worth £18 billion, so there was a surplus in financial services trade of £41 billion.

Impact of Covid-19

The financial services sector has been more resilient to the economic impacts of the coronavirus pandemic compared to other sectors of the economy, in part because staff can work from home.

In November 2020, economic output in the sector was 3% below pre-pandemic levels (February 2020).

As of 30 November, 25,000 financial services employee jobs were on furlough (2% of eligible jobs) compared to 13% across the whole economy. 24% of financial services employers were furloughing staff.

The financial services sector claimed around £447 million under the furlough scheme up to 31 December (note this figure is provisional).

Future of the UK financial services sector

A twice-yearly ranking of the competitiveness of financial markets compiled by a City of London and a China-based think tank ranked London second in the world (narrowly behind New York) in September 2020. Edinburgh was ranked 13th (narrowly behind Luxembourg, which has the highest ranking in the EU).

The data so far suggests that jobs and business has been lost to other financial centres as a result of the UK leaving the European single market, but the impact may not be as big as initially feared by some. It will take time before the full impact, as well as the impact of the Covid-19 pandemic, is fully known. In the meantime, the Government has said it is planning a radical overhaul of financial services regulation intended to make the UK more attractive to overseas markets.

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