Last month’s report by TheCityUK and management consultancy firm Oliver Wyman highlighted the importance of financial and professional services to the country’s economy; supporting nearly 2.2 million jobs and contributing 12% of GDP.
While at one end of the spectrum, an exit from the EU and also the European Economic Area, yet delivering passporting and equivalence and allowing similar access to the single market will have modest impact to UK-based activity.
Revenues from EU-related activity might decline by £2bn and 3-4,000 jobs could be at risk.
On the other hand, if the UK moves to a third country status without equivalence, the impact to EU-related activity could be much greater.
The analysis suggests if the UK’s relationship with the EU rests on World Trade Organisation obligations, up to £20bn in revenue and as many as 35,000 jobs could be lost.
In this case, the wider implications for the ecosystem could amplify the effects, with as much as £38bn in revenues, 75,000 jobs and £10bn in annual tax receipts at risk.
The report, entitled ‘Brexit and the Industry‘, highlighted five key requests for the industry to work towards:
- Deliver clarity and stability to the extent possible;
- Defend the UK’s pre-eminent position in financial and related professional services;
- Map out an exit from the EU which maintains access to key markets while safeguarding future relations;
- Move swiftly to advance trade and investment opportunities with the rest of the world – both in developed and developing economies;
- Develop an even deeper partnership between government, regulators and business.
Chris Cummings, chief executive of the Investment Association, reminded the importance of the asset management community, responsible for running pension money for 75% of UK households and acting as the “engine” behind the savings of millions of UK citizens.
He said: “The Oliver Wyman analysis is an important reminder of the direct contribution of the financial sector, in terms of tax revenues and employment. But beyond the direct contribution, the financial sector plays a key role in helping millions of UK citizens save for the long term and in funding British businesses as they invest and grow.”
With the asset management industry financing 60% of all new capital raising by UK-listed companies, he said it provides the “lifeblood” capital needed for businesses to grow.
“One in every three shares in UK companies is held in portfolios managed by our industry, and our industry’s more than 2,000 corporate governance experts make sure those companies are being managed in a long-term sustainable way.
“The UK has a unique global investment industry exporting services to clients throughout the world - whether within the harmonised framework of the EU single market or beyond it. This will continue, and we will work with government on a trade and investment strategy that will ensure that the UK remains the pre-eminent global centre for investment.”