Stay in the know: Receive our newsletters, reports and event invitations straight to your inbox.

Sign up to our mailing list
Join Search
Search
Close
View all our work

Financial and professional services show strong pandemic recovery

Press release
30 June 2022

The UK-based financial and related professional services industry rebounded strongly last year despite the ongoing challenges following the global pandemic, according to the latest annual ‘UK Key Facts’ report from TheCityUK.

The industry’s economic output (GVA) showed year-on-year growth of 8% in 2021 following a contraction of 0.6% in 2020. Total industry output in 2021 reached £261bn, up by £19bn year-on-year, accounting for 12% of total UK economic output, up from 10% in 2020.

Industry employment also remained relatively resilient throughout the pandemic. Despite a 0.5% fall in employment in 2020 (the latest data available), over 2.2 million people – around one in every 14 UK jobs – are employed in financial and related professional services in high-skill, high-value jobs, with two-thirds of workers based outside London, in towns and cities right across the UK.

The financial services sector remains one of the most productive in the UK economy, with the productivity of the sector more than twice as high as whole-economy productivity in terms of output per hour. Output per hour for the financial services sector was £83.30 in 2020, compared with whole-economy productivity of £39.

The UK’s financial and related professional services industry has weathered the challenges of the pandemic period well. Its relative stability reflects the essential enabling role the industry has within the wider economy, and the continuing strong demand for its products and services within the UK and beyond. This characteristic means that it is well-placed to withstand the myriad economic and geopolitical challenges the coming year is set to deliver, and—particularly given its high productivity, with output per hour more than twice as high as in the economy as a whole—to continue to support UK customers and businesses to help them maximise their own output and productivity.

Anjalika Bardalai, Chief Economist and Head of Research, TheCityUK

UK financial services continue to be a vital source of UK tax receipts, contributing £75.6bn in tax revenue in 2019/20. This accounted for 10.1% of total UK tax receipts that year, roughly equivalent to total public spending on education.

At the height of the economic strain from the pandemic in 2020, the financial services sector continued to attract Foreign Direct Investment (FDI) with inflows of £19.7bn in 2020, representing 57.6% of total inward FDI. Over the past four years (2017-2020), cumulative inflows of financial services FDI totalled £47.3bn, equivalent to 21.8% of overall FDI, constituting the sector that most attracted FDI.

Other highlights from the report include:

  • The outstanding amount of loans made available by major banks to UK businesses totalled £525.5bn at the end of 2021. Of this total, 40.1% was provided to SMEs.
  • SMEs in the UK received £6.5bn worth of funding from alternative business finance providers in 2020, accounting for 48% of the total UK alternative finance market.
  • Despite the pandemic, in 2020, UK private equity funds invested £25.1bn in more than 1,300 UK companies. Regionally, London accounted for 44.2% of total amount of capital invested, followed by the South East (13.2%), Wales & South West (12.4%) as well as North West (12.4%).
  • UK fund managers helped to protect and grow around £11trn of financial assets in 2020, up from £10trn in 2019, representing savings through pensions, life assurance policies and other investments.
  • Pension participation has increased, partly because of automatic enrolment, introduced in 2012. In March 2022, contributions to personal pension pots totalled £31.3bn in 2019/20, up 12% from 2018/19.
  • The UK has the largest and most developed market in Europe for related professional services. In 2021 these sectors all contributed significantly to UK economic output; accounting (£29.5bn), management consulting (£33.3bn), and legal services (£24.6bn).
  • LawTech businesses in the UK had received around £674m in investment as of December 2020 and it is estimated that it would rise to £2.2bn in annual investment by 2026. The average annual growth rate of investment in LawTech from 2017 to 2020 was 101%, greater than the growth showed in other similar sectors, such as FinTech (20%), ClimaTech (5%) and HealthTech (47%).
You might also be interested in
UK legal services 2024: Legal excellence, internationally renowned

Our latest legal services report highlights the enormous benefit legal services provide to the UK. Strong revenue growth and high employment also underline the continued strength and reputation of the UK as a world leader for international legal services.