City unveils Economic Growth Plan that could inject £225 billion into the UK’s economy
Package of reforms and new initiatives across insurance, pensions and sustainable finance could add £2251 billion to the economy, according to new analysis by the City of London Corporation and Oliver Wyman.
The new report, Vision for Economic Growth – a roadmap to prosperity, is the result of months of collaboration with over 300 stakeholders across the financial and professional services industry and throughout the country designed to drive economic growth and jobs across the UK.
The roadmap identifies five key objectives to help the country escape from a low-growth trap, and allow the UK to play its part on the global stage, leading on the world’s key challenges ranging from artificial intelligence to climate change.
There is clear demand for a plan that addresses the needs of savers and consumers and unlocks growth for British businesses and the wider UK economy.
The roadmap, co-authored by eight leading industry experts from - Lloyd’s, Schroders, JP Morgan, EY, KPMG, Barclays, Glasswall and CIPL - offers concrete recommendations and outlines tangible economic benefit across key competitive advantages in UK FPS, sustainable finance and technological and data-driven industries whilst enhancing global policy and collaboration.
Chris Hayward, Policy Chairman at City of London Corporation, said:
“This is an industry shaped vision for what the financial and professional services could look like by 2030 and beyond and how we can help contribute an additional £225 billion of economic growth into the UK economy.
“This figure highlights not only the significance of UK financial and professional services to our economy, but also the urgency by which we must make these reforms to drive the country forward. In a time of mounting competition and economic headwinds, it’s time for a roadmap that future-proofs UK financial services and produces more investment, more jobs, new businesses and more funding for public services.
“Almost everyone in the UK interacts with financial services daily, from the smallest of transactions to life-changing events like taking out a mortgage to buying a new home. This is not a wish list of asks, this is about what the City could contribute, how we can help unlock a significant amount of investment into the system. We’re ready to do this and it’s paramount that industries, Government and regulators work together now to build a strong economy for the future.”
Nicholas Lyons, Lord Mayor of the City of London, said:
“The financial and professional services sector is the engine of our economy, but it needs regular maintenance checks. The UK’s productivity growth is low, GDP increases are sluggish, and wages aren’t keeping pace. The standard of living for many has been flat or declining and the prospects for the younger generation are uninspiring. But, given the right legislative and regulatory conditions, the financial and professional services sector can boost investment in our businesses and drive growth right across the country, financing our future.
“Delivering the far-reaching outcomes outlined in this report will depend on the public sector and private sector collaborating to boost our competitiveness, create great jobs nationwide, and secure a more sustainable future for all.
"It is vital that there is political consensus around these priorities too, so that there is a consistent effort, across the political spectrum, to get the UK back on a path to prosperity. This report is the roadmap. That work begins today.”
The roadmap has five key objectives:
Support the conditions for growth:
- A financial and professional services council would provide urgency, direction, and impact as the sector looks to drive economic growth. Like the No10 Business Council, a Government FPS council will be able to support a new UK-focussed financial and professional services strategy that will drive economic growth across the entire country. The Council would represent an industry that that collectively employs over 2.5 million people across the UK and represents over 10% of UK GDP.
- The Council would be tasked with advising Government on designing and implementing a long-term strategy for how financial and professional services can drive economic growth across the UK.
Raise investment levels:
- We need a culture change across the pensions industry if we are to release the £75bn outlined in the Mansion House Compact. £50 billion from the defined contribution market by 2030 as agreed in the Mansion House Compact, including through a collective investment vehicle that benefits from greater skills and scale. With a further £25 billion to come from Local Government Pension Schemes.
- Strategically deploying government investment will give better returns for taxpayers, leverage in far greater private capital and help transform the next generation of British start-ups.
Become a digital-first economy:
- Adapting digital data verification across a range of products and services could benefit businesses and consumers up to £4.8 billion by 2030, including by reducing fraud losses. Harnessing technology to provide a simpler, smoother, more secure system for customers and businesses will make our lives easier and our money safer.
- Government should create a UK version of the US’s EDGAR system of machine-readable company filings to make it easier for investors to assess decision-useful information about public companies – such as revenue or emissions data - in real time. This will reduce the compliance burden on firms who can allocate more capital to innovation activities.
Anchor the UK as a leader in sustainable finance:
- Sustainable finance markets are innovating rapidly. Making the UK a one-stop-shop for net zero by focussing on voluntary carbon markets, nature, and impact investing, would give us a competitive advantage in a market worth up to £97 billion for net zero transformation.
Develop world-class promotion and interconnectivity:
- Creating a UK knowledge and support hub to showcase our offer to the world could attract an additional £24 billion of FPS exports, £700 million of FDI and 5,000 jobs from FDI by 2030. That means more jobs, more tax receipts, and better services for our country.
- The UK is the 2nd largest services exporter in the world, therefore there should be a shift toward service-oriented trade partnerships. Services can be supported through nimble new agreements on data, digital or professional qualifications.
Looking ahead, the City of London Corporation will actively promote the roadmap's outcomes to be realised in the upcoming UK Parliament and beyond, influencing global policymaking over the next decade. The City Corporation will establish key performance indicators (KPIs) to measure the roadmaps success and convene annually to track progress.
Lisa Quest, Partner and Head of UK & Ireland, Oliver Wyman, said: “The UK financial centre is a global magnet for not only the best and the brightest talents in a wide variety of professions, but also investment in innovative industries like fintech, making it an attractive place to do business and facilitate easy collaboration with the public.This ability to attract talent and money is an asset few rival centres can match.
“If we hope to revive Britain’s growth rate, extend prosperity across the UK, and build a sustainable economy that will deliver for future generations, we need to celebrate our financial centre and empower it to play a leading role in meeting the biggest global challenges of our time.”
Sheila Nicoll, Senior Public Policy Advisor at Schroders, said: "A long-term strategy for financial and professional services in the UK, which brings together, policymakers, government, industry and regulators, will provide a significant opportunity to help us build on our competitive advantages in the sector.
"The recommendations in this report highlight the urgent need for such a strategy to unlock the full potential of the sector in emerging areas, such as sustainable finance, including impact investment and natural capital and technology, including tokenisation. This, will in turn create greater prosperity for the UK economy, the job market and advancement of Britain as a global financial centre."
Katharine Braddick, Group Head of Strategic Policy and Advisor to the Group CEO, Barclays said: “The UK has a long and successful track record as a key player in global markets. Industry collaboration with regulators and policymakers is crucial to ensure we have the right frameworks in place for the UK to continue to be a compelling and competitive place to do business. This roadmap will serve as an important tool for the public and private sector to elevate the UK on the international stage to achieve our shared ambition of driving economic growth and inclusive prosperity for the UK, its businesses and its people.”
Neylin Mutlu, Global Business Manager, Center for Carbon Transition and Sustainable Solutions, J.P. Morgan, said: “Sustainable finance can contribute significantly to growing the UK economy across all regions of the country while also helping to deliver better outcomes for the environment and society. This report gives balanced recommendations on creating the conditions to scale and accelerate finance for the transition and sets out steps to better enable financial institutions to facilitate capital and provide expertise to help clients realise and accelerate their transition objectives.”
Huw Evans, Partner at KPMG UK, said: “The UK is a world leader in financial and professional services but the last thing we can afford is complacency. This roadmap emphasises the importance of bolstering our credentials with international investors, maximising productive long-term investment and ensuring we are a natural home for emerging technologies.
“Making the roadmap a reality will require changes in policy, regulation and behaviours. Unlocking wider opportunities for the UK pensions market is just one of the ways that long-term investment can deliver better outcomes for savers and the economy alike. If all parts of the UK financial system work more closely together to support growth and investment, the roadmap can help make a lasting difference.”
Chris Woolard, Partner & Chair of the Global Regulatory Network, EY, said: “The UK’s financial services sector has a long history of supporting innovation, and as a result, it plays a vital role in driving domestic economic growth. However, with many traditional strengths being challenged by evolving macroeconomic factors and technological advancements, the financial services sector must ensure it too evolves accordingly.
“There is momentum for collaboration across high-growth sectors, and the recommendations announced today are important, tangible steps to ensure the financial services continue to support strong economic growth for the UK long-term.”
Rebekah Clement, Corporate Affairs Director at Lloyd's, said: “This new report sets out a pathway that can ensure the UK economy maintains and strengthens its position as a leading global financial centre, driving future economic growth, investment and jobs across the country. The transition to a sustainable economy requires large-scale investment across multiple industries, and the UK’s insurance industry has a vital role to play in unlocking capital, as well as building societal resilience and protecting the vital progress being made.”
Claire Tunley, CEO of Financial Services Skills Commission, said: “This report shines a light on the critical areas the industry must strengthen to ensure the UK remains a world leader in financial services. A crucial part of this is ensuring our workforce is equipped with the right talent and expertise to build future skills, through upskilling, reskilling, and skills forecasting, which will boost productivity and innovation. This work is vital to tackle existing skills shortages and to ensure our sector remains globally competitive”.
Michael Spence, President and Provost of University College London, said: “London is one of the world’s great innovation-generating cities, with an incredible ecosystem of world-leading universities and research centres, renowned medical institutes, global companies and thriving SMEs. A long-term strategy for financial and professional services in the UK, which brings together policymakers, government, industry and regulators, is crucial to unlocking its full potential and will provide a significant opportunity to help us build on our competitive advantages on the global stage.
“The recommendations in this report highlight the urgent need for such a strategy to unlock the full potential of the sector in emerging areas, such as sustainable finance, including impact investment and natural capital and technology, including tokenisation. This, will in turn create greater prosperity for the UK economy, the job market and advancement of Britain as a global financial centre.”
Danny Lopez, CEO of Glasswall, said: “This roadmap underscores the importance of showcasing the UK’s financial and professional services like never before. Now, more than ever, efforts across the country can propel the sector to unprecedented heights. It is imperative that we continue to support an industry that is the very backbone of our economy and cement its position as a global leader for many decades to come.”
Michael Moore, CEO of British Private Equity & Venture Capital Association, said: “Private capital is making a growing contribution to the nations and regions of the UK. But it needs our strong financial and professional services sector to continue to develop so that the country reaps further benefits from the industry's investment and long-term perspective.
“Our international competitors are not standing still, so as they continue to adapt, we must do likewise. These targeted reforms will help the UK to maintain its competitiveness and ensure that our investment in growth, innovation and people remains strong."
Constantin Cotzias, European Director, Bloomberg, said: "The UK's financial services sector is a key economic engine and competitive advantage for Britain but there is no room for complacency; this roadmap points the way to unlocking greater investment and innovation in order to drive sustainable, nationwide growth and prosperity.
Dan Watkins, BNY Mellon Head of Markets EMEA and Chair of EMEA Executive Committee, said: "With unique insights as the world’s largest custodian bank into how jurisdictions can put in place the right initiatives to deepen pools of capital to power economic growth, we were pleased to be involved in the development of this important report. We look forward to working with the City of London Corporation and the government to deliver on its recommendations.”
Stephen Bird, CEO, Abrdn, said: "How the City can better support the UK’s long-term prosperity is an urgent and critical debate. The good news is that momentum for positive reform appears to be building. This report from the CoLC is a substantial contribution that can help make sure that momentum is sustained – and abrdn is proud to have helped steer the outcomes of anchoring the UK as a leader in sustainable finance and showcasing the UK’s financial and professional services on the international stage."
Notes to editors
The Vision for Economic Growth: A Roadmap to Prosperity report can be accessed here 0001 Thurs 7th Sept: Vision For Economic Growth.
1 Implementing this Roadmap will unlock £225 billion of investment and economic growth into the UK. The £225 billion is made up of £100 billion in insurance reforms, £75 billion in Mansion House pension reforms, and £50 billion in net zero investments.
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