07 May 2009

Report sets out vision for UK financial services sector

A reformed financial services sector will play an important role in Britain’s economic recovery, according to a report published today by the Financial Services Global Competitiveness Group, co-chaired by the Chancellor Alistair Darling and former Citi Chairman Sir Win Bischoff.

The report, which reflects the view of the UK’s financial services leaders, states that the UK’s financial services sector can continue to be a world leader by working as a genuine partner of British business and emerging economies while embracing the need for global regulatory reform.

The Group was tasked in June 2008 with examining the medium to long-term challenges to London’s continued success in global financial markets. Working against the backdrop of the most severe financial crisis in generations, the Group has proposed a ten to fifteen year framework for strengthening the UK’s place in the rapidly changing global financial services industry.

The report highlights the contribution of regional financial centres, noting that the majority of financial sector jobs are based outside the City of London, providing employment for hundreds of thousands of workers in regional economies. It also argues that the UK-based industry must seize opportunities to help meet the financial services needs of businesses and citizens in emerging markets, such as China.

The Group acknowledges the huge fiscal costs of the banking crisis to the global economy, taxpayers and public finances, and strongly argues that effective regulation – with the UK taking a leading role in formulating global and European standards – will be the most important determinant of the sector’s future success.

Alongside regulation, the Report also highlights the importance of maintaining effective long-term performance in areas such as the UK’s skills base, tax environment, innovation and promotional efforts to ensure that the financial services sector is well positioned to play a role in meeting the future economic opportunities of the UK and global economy.

Speaking ahead of the Report’s formal launch at the London School of Economics, Alistair Darling said:

“Next month, we will publish proposals for strengthening the regulation of the financial services industry. Building on that we need to plan for the future. Britain has been a world leader in banking for centuries. Financial services will always be an important part of our own economy, and not just in London. We will all gain from a strong and competitive financial services sector that helps to meet important needs like small business financing, clean energy infrastructure and investment for retirement. And we will also gain from a strengthened financial services sector throughout the world.”

Sir Win Bischoff said:

"International financial services are not a zero sum game: progress in one country need not come at the expense of another. It is strongly in the UK's interest to build on its existing relationships with capital markets around the world, especially in the emerging economies. The timing is right as the financial landscape is changing around the world and we must make sure that world-class centres like London participate and benefit from this trend."

The report can be found on the Treasury’s website:

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