The UK government must promote international trade in financial services including banking and payments, and put this “at the heart” of the country’s post-pandemic economic recovery, a new report has said.
UK Finance’s proposals, an “ambitious strategy” to boost UK exports of financial services, includes using a new set of free trade agreements to lock in UK market access for financial services in key markets and championing a range of World Trade Organisation (WTO)-level initiatives that will support trade in financial services.
The report said the UK is the world’s top net exporter of financial services, above the US and Switzerland, with a financial services trade surplus of $77bn (£55bn) in 2019, and that its banking and finance industry currently employs more than 1 million people.
UK Finance chief David Postings, said that “the banking and finance sector is a significant contributor to the UK economy. The industry’s trade surplus is vital, and we are keen to work with the government and regulators to increase these benefits for the UK.
“We are setting out the tools available to policymakers to achieve this… this would deliver significant benefits for the wider economy as we recover from the impact of the Covid-19 pandemic, increasing exports in other sectors, generating jobs and driving down costs for consumers.”
The report, 'International Trade in Financial Services', recommends developing a comprehensive regulatory diplomacy strategy for financial services.
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It said the UK “has some of the most effective and experienced financial regulators and supervisors in the world. Their relationships with their international peers are a key channel for sharing best practice and shaping the way they develop and implement financial regulation and the way it treats UK firms that invest and trade.”
The aim of this strategy would be to encourage other countries to open their domestic markets to UK-based financial services providers and promote cooperation in innovative areas such as AI, cybersecurity and fintech.
The report also proposes that the UK should use its position at key international bodies like the Financial Stability Board to push for global convergence in financial standards, making it easier for firms to operate across different countries.
In addition, it said the UK should champion initiatives at the WTO to support global free trade in services, while using new trade agreements to unlock market access for financial services in key markets such as Japan and the United States.
Gerry Grimstone, UK minister for investment, said he welcomed the role that organisations such as UK Finance play in representing the interests of the financial services sector.
“Financial Services is one of our most productive and innovative sectors, helping to drive our economic recovery by creating jobs and growth across the country," he noted.
Meanwhile the UK government is being urged to "boost it like Biden" and quadruple its crisis spending to £190bn ($264.8bn) to tackle the economic fallout from the coronavirus.
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