The UK-based financial and related professional services industry rebounded strongly last year despite the ongoing challenges following the global pandemic, according to the latest annual ‘UK Key Facts’ report from TheCityUK .
The industry’s economic output (GVA) showed year-on-year growth of 8% in 2021 following a contraction of 0.6% in 2020. Total industry output in 2021 reached £261bn, up by £19bn year-on-year, accounting for 12% of total UK economic output, up from 10% in 2020.
Industry employment also remained relatively resilient throughout the pandemic. Despite a 0.5% fall in employment in 2020 (the latest data available), over 2.2 million people – around one in every 14 UK jobs – are employed in financial and related professional services in high-skill, high-value jobs, with two-thirds of workers based outside London, in towns and cities right across the UK.
The financial services sector remains one of the most productive in the UK economy, with the productivity of the sector more than twice as high as whole-economy productivity in terms of output per hour. Output per hour for the financial services sector was £83.30 in 2020, compared with whole-economy productivity of £39.
Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK, said, “The UK’s financial and related professional services industry has weathered the challenges of the pandemic period well. Its relative stability reflects the essential enabling role the industry has within the wider economy, and the continuing strong demand for its products and services within the UK and beyond. This characteristic means that it is well-placed to withstand the myriad economic and geopolitical challenges the coming year is set to deliver, and—particularly given its high productivity, with output per hour more than twice as high as in the economy as a whole—to continue to support UK customers and businesses to help them maximise their own output and productivity.”
UK financial services continue to be a vital source of UK tax receipts, contributing £75.6bn in tax revenue in 2019/20. This accounted for 10.1% of total UK tax receipts that year, roughly equivalent to total public spending on education.
At the height of the economic strain from the pandemic in 2020, the financial services sector continued to attract Foreign Direct Investment (FDI) with inflows of £19.7bn in 2020, representing 57.6% of total inward FDI. Over the past four years (2017-2020), cumulative inflows of financial services FDI totalled £47.3bn, equivalent to 21.8% of overall FDI, constituting the sector that most attracted FDI.