PwC’s latest report suggests that a sustainable and well-functioning FS sector could create an extra £62bn across the UK by 2020. Where next for financial services? Regions of opportunity, looks at what a future financial services sector might look like in terms of its contribution to the UK economy.
The potential £62bn contribution to UK GDP would include £26bn of investment by financial services firms in areas such as IT equipment, new buildings and R&D on new financial products, the financial services sector greasing the wheels of the economy by increasing provision of credit and enabling businesses to grow and export more, and financial services institutions employing more people which has a knock-on effect on consumer spending.
The GDP gains could also include an additional £23bn of exports by UK financial services institutions providing services to international clients such as insurance and investment banking.
Putting London’s hub status aside, Scotland would gain the most, with the North West, South East and West Midlands of England also gaining significantly.
Household consumption could also gain by £40bn by 2020, which translates as an extra £1600 per UK household in today’s money, or £267 per year.
Our economics team based their analysis on a scenario designed to represent what a future financial services sector might look like in terms of its contribution to the UK economy:
Scenario: combining a robust regulatory regime that facilitates financial services sector growth with economic conditions that are also beneficial to the financial services sector. The financial services sector grows at a substantial, but more sustainable rate than it did before the 2007 crises.