TheCityUK: UK generates world-leading financial services trade surplus

19 January 2024

UK remains the world’s largest financial services net exporter – with a trade surplus of £92bn in 2022,(£94.9bn) after the US (£154.2bn) and ahead of Luxembourg (£59.5bn), Singapore (£38.2bn) and Germany (£36.8bn).

Despite the continuing challenging economic backdrop, the UK remains the world’s largest financial services net exporter – that is, measuring industry exports minus imports – with a trade surplus of £92bn in 2022, according to the latest research by TheCityUK.

The annual report, ‘Key facts about the UK as an international financial centre’, reveals that the magnitude of exports relative to imports of financial and related professional services indicates that the UK-based industry is highly competitive globally. Exclusively in terms of exports, the UK remains the world’s second-largest exporter of financial services (£94.9bn) after the US (£154.2bn) and ahead of Luxembourg (£59.5bn), Singapore (£38.2bn) and Germany (£36.8bn).

The US continues to be the UK's largest trading partner in financial services, accounting for 33.5% of total sector exports. The EU accounts for 28% of total sector exports, with Luxembourg (6.0%), France (4.8%), and Ireland (4.3%) being the top destinations within the bloc.

Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK, said: “Amidst ongoing political and economic shifts both globally and in the UK, the resilience and adaptability of the UK-based financial and related professional services industry persist. The UK remains a major global hub for international wholesale finance and maintains the world’s largest financial services trade surplus. As such, the industry is a source of strength for the UK economy.”

Bim Afolami, City Minister said: “This research shows that the UK is a dominant financial services centre – we’re the largest net exporter of financial services and the second largest services exporter in the world, leading the way in areas such as legal services, finance, insurance, and private equity.

“But we are by no means complacent – it’s a competitive world and our Mansion House and Edinburgh Reforms will build on our enviable position and help grow our economy.”

Key facts from the report:

• Accounting services and management consulting services
  • The UK is a major international centre for professional services, notably in business management and management consulting with net exports reaching £25.3bn in 2022, and accounting services, which saw net exports of £1.7bn in the same year.

• Banking
  • The UK’s banking sector assets stood at $11.6trn (£9.3trn) as of the third quarter of 2023, ranking as the sixth largest globally and the third largest in Europe. This positions the UK behind France ($13trn), similar to Germany ($11.6trn), and ahead of Italy ($4.1trn).
  • The UK is the world’s largest centre for cross-border banking. In the second quarter of 2023, it accounted for 14% of the total outstanding value of international bank lending and was also the largest centre for cross-border borrowing with a 16% share.

• Legal services
  • The UK is the largest legal services market in Europe, valued at £43.7bn in 2022 and is second only to the US.
  • In 2022, the UK’s legal services sector achieved net exports of £5.7bn.
  • The UK’s prominent status in legal services is enhanced by the international prestige of English common law, which forms the foundation of legal systems in approximately 27% of the world’s 320 jurisdictions.

• FinTech
  • The UK is the world’s second largest destination for FinTech investment after the US and continues to be the top destination for FinTech in Europe.
  • As of 2022, the FinTech sector in the UK comprised over 1,600 firms.
  • In 2022, 593 UK M&A, private equity and VC FinTech deals were completed.

• Currency trading
  • Approximately twice as many US dollars are traded in the UK’s foreign exchange market compared to the US.
  • Overall, the UK accounts for 38.1% of the total global foreign-exchange turnover.

• Insurance
  • The UK’s insurance sector stands as the largest in Europe and the third largest in the world.
  • In terms of insurance premiums, the UK contributes about one-quarter of the total in advanced European economies.

• Private equity
  • The UK private equity market is the most advanced in the world outside the US. In 2022, UK private equity funds invested £44.7bn ($55.2bn), marking the highest amount in Europe.

• Equity trading
  • London is a pivotal centre for global equity trading with the listing of 307 foreign companies on the London Stock Exchange (LSE) as of September 2023, placing it within the top five exchanges globally in terms of this metric.
  • The UK has one of the highest equity market capitalisations as a proportion of GDP amongst the largest countries, at 90.6% at the end of 2022.

• Green Finance
  • In 2022, the UK ranked as the world’s sixth-largest issuer of green bonds. The issuance of these bonds, by far the largest segment of green finance, saw growth in the UK, rising from £2.9bn ($3.8bn) in 2018 to £15bn ($18.4bn) in 2022.
  • There were 410 active sustainable bonds listed on the LSE from over 120 issuers by the end of 2022. Collectively, these bonds raised approximately £160.4bn ($198bn).

The City UK

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