The Value of Europe’s International Financial Centres to the EU economy

A new report, The Value of Europe’s International Financial Centres to the EU Economy, commissioned by TheCityUK and the City of London Corporation on behalf of theInternational Regulatory Strategy Group (IRSG) focusses primarily on eight major international financial centres – Amsterdam, Dublin, Frankfurt, London, Luxembourg, Madrid, Milan and Paris. The report suggests that clustering of European financial centres, and the networking between them, delivers significant and tangible social and economic benefits throughout the European Union.

Whilst the tax and employment benefits that a successful financial services industry can generate are often cited, this report, authored by Europe Economics, shows that individuals and households across the EU also benefit from lower costs through cross border competition for products and services, improved financial security for individuals and economic stability for governments.  

With wage growth over the average lifetime of 2 per cent, a well-functioning financial sector can add around 5 per cent to GDP from savings-and-borrowing effects alone. With this figure rising to 8 per cent if income growth is 2.5 per cent, it is clear that financial services have a vital role to play in contributing to and supporting a faster growing EU economy.

The breadth and depth of the EU’s financial services industry provides access to capital for businesses in all industry sectors, encouraging trade-led growth and investment across all EU countries. With some €280bn raised through IPOs on European stock exchanges between 2002 and 2010, businesses have been able to flourish by investing in core areas such as research and development and merger and acquisition activity.