Brexit cities stand most to lose if a bad services deal is reached
New data published today suggests financial hubs outside of London – many of which voted to leave the EU - could stand to lose most if the UK’s financial services sector is negatively impacted by Brexit.
The report by the think tank Centre for Cities and supported by the City of London Corporation, ‘London links: the geography of financial services in the capital and beyond’, looks at how much individual cities across the UK export in services, and what proportion of these services exports came from the financial sector.
It finds that cities such as Cardiff (81%), Northampton (76%), Leeds (71%) and Edinburgh (69%) rely heavily on finance as their major services exporter. Comparatively the financial sector makes up 41% of London’s entire services exports.
Financial services accounted for at least a quarter of total exports in nine of the 63 cities evaluated, including Ipswich (25%), Bristol (26%), and Swindon (34%).
Of the UK’s cities most reliant on financial services exports, more than half voted to leave the European Union in the referendum two years ago*.
It is estimated that a third of all UK financial services exports go to the European Union, or approximately 36% of the total. This is followed by the US (21%), Japan (6%) and Canada (1%).
Policy Chairman of the City of London Corporation Catherine McGuinness said:
“The UK’s financial services sector is often associated with London’s iconic skyscrapers, but its reach extends well beyond the Square Mile’s borders.
“This data makes clear that some of the UK’s major cities rely heavily on financial services, and that a detrimental Brexit deal for the UK’s financial sector will be felt nationwide – not just in the capital.
“Government outlined enhanced equivalence plans in a Brexit white paper earlier this month. A great deal of ‘enhancements’ would need to be made to the current equivalence regime. The sector is eager to work with Government to clarify how this regime might be expanded to cater to the needs businesses and households on both sides of the Channel.”
Chief Executive of Centre for Cities Andrew Carter said:
“Financial and professional services play an important role in city economies across the UK, so a bad Brexit deal for services will be a bad deal for many cities too.
“London is well-placed to bounce back from any post-Brexit downturn thanks to its vast labour-market and business base. However, the worry is that many other cities – especially those outside the Greater South East – will struggle to adapt to the potential shocks that might lie ahead.
“The Government has outlined its plans to take services out of the EU single market. It should not underestimate the damaging impact that this could have on jobs and wages in cities across the UK.”
The report finds that the average productivity of those working in the financial sector is almost double that of the national average (£58,888), ranked at £114,678 in 2016.
It’s estimated that there are 1.1 million financial services jobs in the UK – two-thirds of these are based outside the capital.
This research complements a recent report by TheCityUK – Exporting from across Britain – which showed the regional distribution of financial and related professional services exports.
Earlier this year, the City of London Corporation doubled its regional strategy, expanding its engagement with Birmingham, Leeds and Cardiff. This is in addition to the organisation’s existing partnerships with Belfast, Edinburgh and Manchester.
Notes to editors
The City of London Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally-successful UK. www.cityoflondon.gov.uk
Centre for Cities is a research and policy institute, dedicated to improving the economic success of UK cities. We are a charity that works with cities, business and Whitehall to develop and implement policy that supports the performance of urban economies. We do this through impartial research and knowledge exchange. For more information, please visit www.centreforcities.org/about
*Data on UK cities that voted to leave the European Union: BBC News.