The City’s contribution cannot be taken for granted
Growth in London or the regions is not a zero-sum game. The success of the City is good for the whole country, writes Chris Hayward
As the Prime Minister, Cabinet and thousands of business leaders gather for Labour Conference, attention will inevitably turn to the Chancellor and the signals he sends about the government’s ambitions for growth in his speech later today.
The backdrop is sobering. The OECD expects UK growth of just one per cent in 2027, a rate that will make it harder to meet the demands of funding public services, renewing infrastructure and strengthening national defence.
Yet there is another story about growth that deserves to be heard. The success of the financial and professional services sector and its contribution across the UK.
The UK-wide success of the financial services sector
The sector employs nearly 2.5m people, two thirds of which are outside of London. Not only does the sector support over 1.5m regional jobs, new analysis by the City of London Corporation shows that the sector supports employment in every parliamentary constituency.
In Manchester Central, represented by education secretary Lucy Powell, there are around 51,000 jobs in the sector, almost one in five of all the constituency jobs. In Birmingham Ladywood, represented by home secretary Shabana Mahmood, the figure is 43,000. In Swindon South, represented by transport secretary Heidi Alexander, it is more than 10,000. Across constituencies represented by Cabinet ministers alone, more than 126,000 jobs are supported in their constituencies.
Financial and professional services also provide the capital that allows entrepreneurs to start businesses, scale-ups to expand, university spin-outs to commercialise research and infrastructure projects to get built. The government is right to make growth a national priority. But growth cannot be delivered by Whitehall alone. It requires partnership between government, business and the places where investment ultimately lands.
Let us speak plainly. Growth in London or the regions is not a zero-sum game. The UK needs both to succeed. London is a gateway, channelling investment and opportunity nationwide. A globally competitive City can be a national asset, and a thriving Manchester, Birmingham, Leeds, Bristol, Edinburgh or Glasgow strengthens the wider UK economy. Our forthcoming analysis will show just how strong these economic interconnections are.
That is the approach the City Corporation has taken for years.
Don’t take the City for granted
From the Mansion House Accord and Sterling 20 to the Office for Investment: Financial Services, we have worked with successive governments to connect global capital with opportunities across the UK. Our latest initiative, Invest Connect, is designed to take that partnership further by giving investors managing trillions of pounds of assets a direct route into infrastructure opportunities across the nations and regions. Liverpool City Region, Cornwall Council and the Scottish Government are already helping pioneer the platform as founding opportunity partners.
But we cannot take this contribution for granted.
Capital is mobile. International investors have choices, and policy decisions inevitably influence where they choose to put their money.
That is why the City Corporation in our budget submission is calling for a programme of tax simplification to reduce unnecessary compliance costs for businesses, alongside a pathway to reform taxation on UK equities, including the removal of stamp duty on share trading. These are practical measures designed to improve the conditions for investment and boost our competitiveness. There is a broader lesson here.
Britain has no shortage of ambition, talent and workers. But we do have a shortage of investment and, too often, a failure to connect capital with opportunity.
The Square Mile wants to work with the Chancellor to make that happen. The government has an important role in creating the conditions for investment to flourish. Business has a responsibility to invest, innovate and create jobs. The City Corporation can help convene, and bridge the two.
Chris Hayward is policy chairman of the City of London Corporation