The UK’s services sectors are being hamstrung by political neglect and a lack of attention in trade policy, a top City group warned today.
Nicola Watkinson, Managing Director, International Trade and Investment at industry group The CityUK, said it was “a little bizarre” that the UK services industry still had to fight for visibility and inclusion in trade policy despite making up some 80 per cent of economic output.
“Traded goods offer better photo opportunities and consumers find it easier to understand their importance,” she told City A.M.
“Government and business need to do more to show people how businesses and consumers rely on services trade every day. Over 85 per cent of financial services are now delivered digitally and this is a huge area of growth that needs to be captured in trade policy.”
Financial and professional services accounted for some 80 per cent of UK economic output in 2018 and earned a trade surplus of £117bn, which has ballooned to £119bn post-Brexit, according to research from thinktank UK in a changing Europe.
Watkinson said the UK’s competitive advantage lies in its finance and professional services sectors and ministers needed to “publicly recognise” and “celebrate the contribution that the UK’s international financial centre makes to UK jobs and growth”.
The government has been looking to breathe new life into the UK services industry this year in the long-awaited Financial Services and Markets Bill unveiled last week, in a bid to scrap a swathe of EU regulation and ignite a second ‘big bang’ in the City.
But concerns have grown in the City that the regulatory reform agenda may be blown off course by recent political turmoil. The CityUK has called for prospective Tory leaders to now shift the services sector to the top of the agenda as it looks to strike new trade deals going forward.
“Prioritise trade agreements with those countries that are likely to secure the greatest economic benefits for the UK. Put trade in services at the heart of all of these negotiations,” she said.
The group has called for the new leaders to set “an ambitious target” for the UK to regain its position as the world’s leading international finance centre and implement a swathe of reform in trade policy, including removing equity caps and joint venture requirements – which the group said hampers investment from UK-based financial institutions to invest in overseas markets.