Speech given by Bruce Carnegie-Brown, Chair, TheCityUK Leadership Council at our International Conference 2024.
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Thank you, Miles. Good morning, everyone.
It’s my pleasure to welcome you to TheCityUK’s International Conference.
Before I start, I must thank our stalwart sponsor, Freshfields Bruckhaus Deringer, for partnering with us on this annual event.
Thank you also to our speakers and panellists; all of whom, I’m sure, are poised to put their minds to some of our industry’s most pressing questions and challenges this morning.
Since our last International Conference, it’s fair to say the world is more complex, volatile and uncertain than ever before.
Against a backdrop of major issues which include climate change, the war in Ukraine, conflict in the Middle East and the ongoing pressures from rising living costs – we are faced with potential political change through an unprecedented number of elections taking place in over 60 countries, with 49% of the world’s population eligible to vote.[1]
On the agenda too are both technological change with the accelerating evolution of AI and economic change as inflation proves difficult to tackle, keeping interest rates higher for longer and creating deepening inequality around the world.
At the same time, the values we built our models on – free trade, openness, multilateralism – are being challenged as never before.
Uncertainty is therefore the persistent pulse of our times.
While those conditions make it difficult to predict the outcomes during this pivotal period; they do not make it impossible.
In fact, they present an opportunity for the financial and related professional services industry to do its important work in analysing, financing, auditing and insuring the solutions that will help people respond to these changing conditions.
Given Lloyd’s history in understanding climactic conditions, you’ll forgive me for using a weather analogy to make my point.
This century we have already weathered a series of consecutive storms, bookended by the 9/11 attacks on US soil and a land conflict in Europe, with a global pandemic and financial crisis in between.
It fair to say that a constant ‘blue skies’ forecast cannot be expected.
We should be prepared for more stormy weather in the next quarter of this century.
Whether we’ll be subject to freak squalls in the future or something more cyclonic, we must both take stock of where the industry finds itself in this state of global flux and prepare to navigate through perilous times ahead.
To weather any storm, both stability and agility are required.
A strong foundation coupled with an ability to innovate and embrace change. That is what the UK needs – and increasingly, is demonstrating – to support growth and global competitiveness going forward.
So, taking stability first:
As an industry, we have a ready foundation here in the broad consensus seen on issues like climate and culture and the need to create more sustainable and inclusive organisations.
We also have a good track record: our industry has provided vital stability through conflict in Ukraine – including TheCityUK’s recently established work through the City-Ukraine Hub with the First Deputy Prime Minister and Minister of Economy of Ukraine. So far, financial markets are also taking the uncertainty caused by the conflict in the Middle East, which includes significant disruption to shipping and global supply chains in the Red Sea, in their stride.
And our performance is matching that stability: at the end of last year, 79% of bank credit rating outlooks were stable[2], and the general insurance industry is reporting strong financial results, building vital capital into the system to pay significant claims, such as those which will arise from the Baltimore Bridge disaster in the US last month.
More broadly, UK businesses have seen the highest level of inward foreign investment in the world behind China.
We’ve also seen our services-driven economy push the UK to the position of fourth largest exporter of goods and services globally - up from seventh place in 2021 - according to the latest figures by the United Nations Conference on Trade and Development.[3]
What’s important now is that we work together across industry, government, and regulators to maintain that stability by underpinning the conditions for ‘fair weather sailing’.
That is why we have supported the Government’s agenda for financial policy and reform, through the Edinburgh and Mansion House Reforms and the Financial Services and Markets Act of 2023, which demonstrate an appreciation for both our industry’s growth ambitions and the need for our industry to be competitive in generating financial returns which will allow it to take on more risk safely in these turbulent times.
Similarly, we’re pleased to see the Labour Party committed to supporting the growth of the UK’s financial services sector, recognising its ability to generate prosperity across the wider economy.
A consistent vision is essential to supporting steady, consistent growth which gives people the confidence to invest, lend and start-up in a challenging economic environment.
That’s also the case for how our industry is regulated, where I hope you’ll already have your hands on the joint report published this morning by TheCityUK and Freshfields.
It calls for our regulators to recognise their role in supporting the UK’s international competitiveness, recommending how best to embrace this, and be held accountable for it in tandem with our industry’s needs.
What we need is efficiency, proportionality and an understanding of the UK’s strengths and weaknesses in the context of an increasing number of global competitors.
As you will see, there is still much work to be done, but we’re on the right track.
While stability gives us the foresight to set long-term goals in times of uncertainty – agility is the driving force that allows us to see them through.
Our connected world brings risks, but also opportunities. And none more so than in areas such as the transition to low carbon models and adoption of rapidly emerging technologies.
To grasp these with both hands, we must work up a healthy risk appetite and match it with cutting-edge innovation to keep the UK ahead of the curve.
When it comes to technology, the UK boasts a modern economic success story, having attracted a vibrant ecosystem of world-leading research facilities and pioneering international start-ups.
Already a global innovation centre hot on the heels of the US and China, the UK startup community is worth over $1.1trillion and made up of over 40,000 members, attracting more funding than anywhere else in Europe.[4]
There is no reason the UK should not maintain its leadership position in this area.
In tech, data is king, and our knowledge-sharing architectures keep industry and government on top of the ‘yet to be known’.
Forums like Lloyd’s Futureset research platform brings practitioners and experts together to understand emerging risks; the National Cyber Security Centre’s Information Sharing Partnership keeps a watchful eye on potential cyber threats, and, of course, TheCityUK’s ongoing consultation on issues from Big Tech to global trade, encourages industry-wide alignment on the opportunities and changes facing the UK economy.
Agility is fuelled by fresh perspectives. The innovation that drives us must be powered in turn by individuals that are creative and forward-thinking.
We are already a centre of expertise for future skills, home to the highest concentration of cyberspecialists in the G20.
Our services-heavy economy is, in many ways, a skills-magnet that has been underpinned by our world-leading universities. Bucking the post-Brexit trend, the number of undergraduate applications to UK universities from overseas has increased in recent years.[5]
We must ensure these talented individuals find a home in our industry.
This means affording UK-based businesses the flexibility to mobilise talent from overseas in the short term, driving progress in developing globally attractive products and services by attracting the greatest variety of essential skills.[6]
We therefore have a strong base in the stability and agility being demonstrated by the UK-based financial and related professional services industry.
Coupled with the regulatory and political stability needed to attract investment to the UK, there is no reason this growth and innovation cannot continue in the coming years.
Returning to our forecast: while we know that we cannot expect cloudless skies, we have the talent and skills to weather the unexpected and I know the UK-based financial and related professional services industry will help navigate our economy through to more sunlit uplands.
Notwithstanding the strong likelihood that we will encounter more storms, a mindset which supports growth and drives competitiveness – alongside the innovation of our sectors fuelled by the world’s sharpest minds – means the outlook for the future is bright.
Thank you.
[1] Elections Around the World in 2024 | TIME
[2] Global Banks Outlook 2024 (spglobal.com)
[3] Services trade sees UK become world’s fourth largest exporter (cityam.com)
[4] UK Tech Startups | A Look at Speedinvest's Portfolio in the UK
[5] Overseas student applications to UK universities rise again - BBC News
[6] Today’s short-term mobility reforms: Smoother access to global talent | TheCityUK
