Against a challenging backdrop, the UK-based financial and related professional services industry has demonstrated its resilience, seen significant employment growth, and continued to attract positive inward investment flows, according to the latest available data set out in TheCityUK’s ‘Key facts about UK-based financial and related professional services 2023’ report.
The data in the report refer to 2021 and 2022, the latest periods for which annual data are available.
Employment in financial and related professional services increased substantially in 2021 to almost 2.5 million, up 9.2% year on year from 2.2 million. Around one in every 13 people is employed in the industry in high-skill, high-value jobs, with two thirds of those based outside London in towns and cities across the UK.
The industry’s economic output (gross value added (GVA) also grew in 2022, rising 6.8% to £275bn, up £14bn year on year and accounting for 12% of the UK’s total GVA. In 2021, productivity in the financial services sector increased, up 14% year on year. The sector’s productivity is almost 2.5 times as high as whole-economy productivity in terms of output per hour: £96.3 for financial services compared with £40 for the whole economy.
While overall direct investment flows into the UK were negative £52bn in 2021, the financial services sector was among the few sectors to register positive Foreign Direct Investment (FDI) inflows, attracting £4.5bn. Over the past five years (2017-2021), cumulative inflows of financial services FDI totalled £60.8bn, equivalent to 36.6% of overall FDI – more than any other sector.
Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK, said, “The financial and related professional services industry is an enabler of growth in the wider economy, making significant contributions to UK employment, tax receipts, and the balance-of-payments position. It is a crucial economic asset but also has a tangible impact on people’s daily lives, supporting their ability to save for the future, invest in businesses, and manage financial risks. This year’s report underlines how – just as it did during the pandemic-induced economic shock of 2020 – the industry continues to evolve to support people, businesses and the wider economy against a challenging and fast-changing macroeconomic backdrop.”