UK Financial Markets see gradual pick up in activity in the last 6 months

• 6 out of 11 indicators of financial services activity up in Q3 over Q2
• London holds leading share of international trading in many markets
• Global investment banking fee revenue down 4 per cent in first nine months of 2009 on same period in previous year

UK financial markets: A number of sectors and markets have seen gradual gains in the second and third quarters of 2009, although activity remains low compared to levels of activity in the previous years, according to the six-monthly International Financial Markets in the UK and quarterly City Indicator Bulletin reports both released today by International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide.

6 out of 11 financial market indicators were up in Q3 2009, a continuation of the trend seen in the second quarter of this year. These included the number of City job vacancies, which reached 11,529 in Q3 2009, from 9,720 in Q2 2009. CEBR are also more optimistic on the employment outlook having recently cut their estimate of expected losses in City type jobs in 2009 from 29,000 to 19,000. The office market is showing signs of stabilising with take up rising and the vacancy rate declining for the first time in two years. UK wide indicators were also encouraging. The CBI’s quarterly survey found that the volume of business in UK financial services rose for the first time in two years in the third quarter of this year. The overall UK picture remains mixed with 8 out of 11 indicators - including new job vacancies, prime rents and UK equity turnover – reporting lower levels of activity compared to the same period last year.

UK’s share of international financial markets: Global investment banking fee revenue totalled $44bn in the first nine months of 2009, down 4 per cent compared to the same period in the previous year. The US was the primary source of income with around 50 per cent of the global total. Although the UK’s $3.7bn in fee revenue accounted for around a quarter of the European total, around 50 per cent of European investment banking activity was conducted in London.

London has maintained a considerable share of international trading in many markets. Most recent figures show that London had a 36 per cent share of global foreign exchange trading, 19 per cent of international bank lending, 18 per cent of hedge fund assets and 19 per cent of foreign equities turnover.

Duncan McKenzie, IFSL’s Director of Economics, said: “While recovery in financial markets remains tentative, the UK has a broad and deep financial services market on which to build. The structural strengths - diversity of markets, strong skills base, global orientation and legal system - that underpin London’s status as a global financial centre remain in place.”

Click here to view PDF of International Financial Markets in the UK report
Click here to view PDF of City Indicators Bulletin