Financial services in the UK

The UK’s financial system

The financial system is made up of various types of institutions including companies, associations and regulators. This paper provides a broad overview of the roles these institutions play and the laws which govern them.

In 2022, the UK financial system had assets of around £27 trillion. Of this, £14 trillion (around half) was held by banks, £1 trillion was held by the Bank of England, and the remainder was held by insurance companies, pension funds and other financial institutions (for example investment funds).   

The UK’s largest banks by total assets are HSBC, Barclays, Lloyds, NatWest and Standard Chartered.

Economic output and jobs

The financial and insurance services sector contributed £208.2 billion to the UK economy in 2023, 8.8% of total economic output. It was the fourth largest industry in terms of economic output. The financial services sector was largest in London, where half of the sector’s economic output was generated.

The UK financial services sector was the fourth largest out of Organisation for Economic Cooperation and Development (OECD) countries in terms of the proportion of national economic output it generated in 2023. Luxembourg’s financial services sector was the largest in the OECD, contributing 24% of the country’s economic output. 

There were 1.17 million financial services jobs in the UK in the first quarter of 2024, 3.1% of all jobs. It was the 12^th largest sector in terms of the number of jobs supported out of the 20 major industrial sectors.

Trade in financial services

The UK exports a lot more financial services than it imports. In 2023, exports of financial services were worth £91.8 billion, while imports were worth £18.6 billion, resulting in a trade surplus of £73.2 billion.

The value of financial services exports in real terms (adjusted for inflation), and as a proportion of all services exports, has generally fallen since the 2008 financial crisis. The value of the UK’s trade surplus in financial services was 28% lower in 2023 compared to 2008.

UK trade in financial services with EU countries has changed significantly between 2017 and 2023. The proportion of financial services exports going to the EU was 40% in 2017 compared to 34% in 2023.

UK financial services exports to the US, Switzerland, Canada, Hong Kong and Singapore have increased by 78% in cash terms between 2017 and 2023, compared to 29% for the EU.

The change in the nature of UK trade in financial services with the EU is likely to be at least partly a result of the end of the Brexit transition period in January 2020. The UK-EU Trade and Cooperation Agreement (TCA) included limited provision for access in financial services.

Tax contribution of financial services

Taxes on the financial services industry raised £37.1 billion in 2023/24, 3.5% of all taxes collected that year according to data from HMRC. Research from PwC for the City of London Corporation using a broader measure of taxes reported that the financial sector contributed £79.3 billion in taxes in the year to March 2023, 9% of total government receipts in 2022/23.

Other sources

There are a several other sources of information on the financial services sector. City UK represents the interests of the financial services sector in the UK and publishes an annual assessment of the economic impact of the UK financial services sector, most recently in March 2024:
Key Facts about UK-based financial and related professional services.