TheCityUK: Financial and professional services show strong pandemic recovery
30 June 2022
The UK-based financial and related professional services industry rebounded strongly last year despite the ongoing challenges following the global pandemic, according to the latest annual ‘UK Key Facts’ report from TheCityUK.
The
industry’s economic output (GVA) showed year-on-year growth of 8% in
2021 following a contraction of 0.6% in 2020. Total industry output in
2021 reached £261bn, up by £19bn year-on-year, accounting for 12% of
total UK economic output, up from 10% in 2020.
Industry
employment also remained relatively resilient throughout the pandemic.
Despite a 0.5% fall in employment in 2020 (the latest data available),
over 2.2 million people – around one in every 14 UK jobs – are employed
in financial and related professional services in high-skill, high-value
jobs, with two-thirds of workers based outside London, in towns and
cities right across the UK.
The financial services sector
remains one of the most productive in the UK economy, with the
productivity of the sector more than twice as high as whole-economy
productivity in terms of output per hour. Output per hour for the
financial services sector was £83.30 in 2020, compared with
whole-economy productivity of £39.
The UK’s financial and related professional
services industry has weathered the challenges of the pandemic period
well. Its relative stability reflects the essential enabling role the
industry has within the wider economy, and the continuing strong demand
for its products and services within the UK and beyond. This
characteristic means that it is well-placed to withstand the myriad
economic and geopolitical challenges the coming year is set to deliver,
and—particularly given its high productivity, with output per hour more
than twice as high as in the economy as a whole—to continue to support
UK customers and businesses to help them maximise their own output and
productivity.
Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK
UK financial services continue to be a vital source of UK
tax receipts, contributing £75.6bn in tax revenue in 2019/20. This
accounted for 10.1% of total UK tax receipts that year, roughly
equivalent to total public spending on education.
At the height
of the economic strain from the pandemic in 2020, the financial services
sector continued to attract Foreign Direct Investment (FDI) with
inflows of £19.7bn in 2020, representing 57.6% of total inward FDI. Over
the past four years (2017-2020), cumulative inflows of financial
services FDI totalled £47.3bn, equivalent to 21.8% of overall FDI,
constituting the sector that most attracted FDI....
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