The uk-eu relationship in financial services

Financial services in the UK
7. Financial services, the Committee heard, “are important in any economy, 
because they support activity in every other part of economic life: from 
holding and protecting money for customers, to channelling savings into 
lending to government, and much more.”
2
This is particularly the case in 
a UK context. The sector is an important component of the UK economy: 
according to TheCityUK’s December 2020 report, 
Key Facts About the UK 
as an International Financial Centre 2020
,
3
the UK’s trade surplus in financial 
services was $77 billion in 2019, making it the world’s largest net exporter of 
financial services. In evidence submitted to this inquiry, the trade association 
UK Finance described financial services as “the UK’s most successful 
international export”. The organisation added that “the EU is a key market 
for those firms operating in the UK”
4
, which is supported by data from the 
Office for National Statistics (ONS): in 2019, 37% of the UK’s financial 
services exports went to the EU (compared with 30% to the USA over the 
same period).
5
8. The UK’s financial services sector is not only significant to the domestic 
economy; it is also vital for the functioning of the wider global economy. Driven 
by its location, bridging time zones between the major financial services 
centres in East Asia and the Americas, and lying in close proximity to the EU, 
the world’s largest trading bloc, the sector plays a pivotal role in the world’s 
financial markets. Its participants “benefit from an ecosystem recognised for 
its openness, global connections and a culture of collaboration”
6
. English 
law, with its well-respected courts, its mature arbitration system, and its 
world-class legal services sector is frequently selected as the governing law 
for international contracts.
9. As a result, London has developed “the largest financial services cluster in 
the world” ,
7
having “the deepest and broadest capital market in Europe, if 
not one of the two premier capital markets in the world”,
8
and an insurance 
market “bigger than all of its competitors combined”.
9
10. While financial services are most frequently associated with the City of 
London, Mayfair, and Canary Wharf, the sector is widely and deeply 
distributed across the UK. Lord Hill of Oareford, former European 
Commissioner for Financial Stability, Financial Services, and the Capital 
Markets Union, commented that one “cannot disassociate what is happening 
in the City from the broader economic policy framework for the rest of the 
country”
10
. Sir Jon Cunliffe, Deputy Governor of the Bank of England, 
noted that “There are other big centres [outside London]. Edinburgh is 
big for insurance, and for some of the ancillary services such as legal and 
2 
Written evidence from UK Finance (
RFS0005
)
3 TheCityUK, Key Facts About the UK as an International Financial Centre 2020, (December 2020): 
https://www.thecityuk.com/media/0a1hidsm/key-facts-about-the-uk-as-an-international-financial-
centre-2020.pdf
[accessed 16 June 2020]
4 
Ibid.
5 
Office for National Statistics, ‘The Pink Book, 03 Trade in Services’ (29 October 2021):
https://www.ons.
gov.uk/economy/nationalaccounts/balanceofpayments/datasets/3tradeinservicesthepinkbook2016
[accessed 8 June 2022]. Note that the ONS categorises insurance separately and insurance exports are 
therefore not included within these figures.
6 
Written evidence from the City of London Corporation (
RFS0002
)
7 
Ibid.
8 
Q 79
 (Michael Dobson) 
9 
Written evidence from London Market Group (
RFS0009
)
10 
Q 65

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9
THE UK-EU RELATIONSHIP IN FINANCIAL SERVICES
accounting Birmingham is a big centre.”
11
This was echoed by the Economic 
Secretary:
“I think it is often overlooked that two-thirds of jobs in financial 
services are outside London. With the fund management industry in