Thank you, Miles. Good morning, everyone.
I join with Miles in welcoming you all to the Library of Birmingham for TheCityUK’s annual National Conference. And I echo his thanks to our sponsors for today’s event, PwC, Guernsey Finance and State Street.
As we enjoy these fabulous surroundings, it is sobering to reflect that all the knowledge and insight contained in the books on these shelves are now accessible to you on your smart phone.
Our theme today is the role of our industry in enabling the national growth agenda. The twin imperatives of growth and innovation which will feature heavily in our discussions here today are also central to discussions being held around the world, where governments in many countries and from all parts of the political spectrum are acknowledging the need to generate higher rates of economic growth if we are to meet the aspirations of our citizens with respect to their quality of life.
Our new government has made economic growth the centrepiece of their ambition for the country and have also recognised the need for government to partner with the private sector to achieve this growth.
Most importantly, in both their ‘Invest2035’ modern industrial strategy and the Financial Services Growth and Competitiveness Strategy, they recognise the prominent role that the UK’s financial and related professional services industry will play in enabling economic growth.
Our government is fortunate indeed that in the UK we have a financial services industry that both spans all the nations and regions of the UK and is a leader globally.
Birmingham built its position as the UK’s ‘second city’ in the 19th century as the UK became the ‘workshop of the world’. And the city’s position is underpinned today by its role as a major financial hub, generating £4.7bn of economic output in 2022 and accounting for over 40% of the 178,000 jobs provided by the industry across the region.
Outside London, Birmingham is the number one destination for many of our industry’s leading firms – think HSBC, Deutsche Bank, Deloitte, DLA Piper, Goldman Sachs and HSBC to name just a few. It also boasts the UK’s fastest-growing tech sector - worth £15.3bn - and hosts an ecosystem of over 200 fintech companies.
Beyond Birmingham, the financial and related professional services industry is a national champion, paying more corporation tax than any other sector and contributing over £110 billion to the public purse last year. We are playing our part in funding essential services across the UK.
Across the country, we account for £12 of every £100 of economic output and employ around 1 in every 13 people in work – that’s over 2.4 million people – and two thirds of these jobs are based outside London.
And beyond the borders of the UK, our industry generates an annual trade surplus of more than £90Bn.
In short, financial and related professional services are a strategic national asset, a growth accelerator and a powerful motor for our economy.
In recent months, some of the fog of uncertainty which has generated headwinds for the country has been lifted: in the UK we have a change of government, offering the possibility of stability and predictability which have been sorely lacking in recent years.
The new government has made its budget choices, enabling businesses to plan with greater clarity. And elections in the United States have delivered an unambiguous result. Of course, not everything is resolved, particularly on the Continent, with elections due in Germany and the new EU Commission yet to take office. We also still have an unresolved major land war in Europe for the first time in 80 years.
While we will never enjoy as much certainty as we would like, this Library should inspire us to be the authors of our own story. And UK financial and related professional services must feature on every page, in every chapter. We are a protagonist in the national drama and there is much work to do if we are going to live happily ever after.
Let me name three chapters in that story where our industry is uniquely positioned to support the government’s mission of driving real, measurable and inclusive growth across the UK: building up, branching out and thinking green.
First, ‘building up’. We’ve quite literally got to build bridges, across the country, to jump-start productivity with capital investment in the country’s infrastructure.
As our Victorian forebears understood, foreign and domestic business investment thrives on solid public infrastructure. Today that means everything from transportation and telecommunications to technology and data.
But the UK has ranked lowest in the G7 for rates of investment since the 1990s. Tech and data infrastructure requirements in particular are rapidly increasing and are critical to the future health and competitiveness of our economy.
Boosting investment is essential for regional hubs like Birmingham; creating jobs, freeing up mobility and supplying the predictable, long-term funding to make economic growth a reality. As such, our industry is keen to work not just with government, but also with mayors and other devolved leaders to connect capital with the vital projects that will shape the future.
Positioned alongside our financial pillars – our capital markets, our banks, our pension and investment funds and our insurance companies – the National Wealth Fund could prove a great aid to investment; building confidence by promoting incentives to invest, all the while leveraging industry expertise and working with regional mayors to target the unique growth needs of their local areas.
So it is good to hear the government’s confirmation that HS2 will run from Birmingham to Euston and that both national and regional leaders are keen to invest further in vital transport infrastructure, connecting our thriving regional hubs.
And Birmingham is set to revive its Camp Hill line, which will serve as a vital artery to the heart of the city; helping to mobilise talent towards emerging opportunities. While elsewhere across the region, the Coventry and Warwick Gigapark has an important role to play in powering the UK’s electrified future.
Next, to make gains on growth we’ve got to ‘branch out’. To me that means investing in innovation, and supporting emerging industries and businesses deploying new and exciting technology. And it’s also about supporting the transition of old businesses using new technology to improve our productivity and to decarbonise our environment.
Our industry has been using AI safely and effectively for several years, and now the rise of Generative AI holds unfathomable potential to revolutionise every sector of the economy. It’s promising to see the government launch an ‘action plan’ to capture the opportunities available to the UK in this space.
As a primary investor in and promoter of tech innovation and cybersecurity resilience, our industry is well-placed to showcase those benefits.
Mobilising the UK’s world-class research base is the key to getting ahead in tech. That’s an ecosystem of top-class universities, like those here in the West Midlands – generating over £2 billion in spinout investment - and a thriving R&D network of nearly 300 tech incubators and accelerators.
One of those 300 incubators is the Lloyd’s Lab hosted in the building where I work. Over 100 start ups have participated in the Lab delivering significant innovation in products and services to the insurance market during the five years since it was formed.
Lastly, ‘thinking green’. Financing the net-zero transition, reversing biodiversity loss, delivering green energy security – these are challenges that can be met by our industry.
The UK has proven itself a leader in sustainable finance, able to direct long term capital, funding, expertise and insurance to address our generation’s biggest risk.
Finance has the power to lead the transition. We are able to accelerate and scale investment, manage risk, and boost confidence for green projects.
By way of example, in the Lloyd’s insurance market we are developing products to insure against leakage from commercial-scale carbon capture and storage facilities and to insure the validity of carbon credits.
Strengthened domestic policy frameworks can complement work like this and can mobilise private finance to invest in green growth.
A clear, coherent and internationally aligned sustainable finance regulatory framework will play a crucial role in supporting financial services to manage the risks and opportunities of the net-zero transition and enable the UK to remain an attractive destination for green investment. This would also help increase funding for low-carbon projects.
Building up, branching out and thinking green provide fertile ground for our collaboration with government and with each other. To succeed, we will need to take risks and we will need to nurture a culture of smart risk taking - as the Chancellor said in her recent speech at Mansion House: we have been regulating for risk and we need to regulate for growth.
I have already detected a positive change in the approach taken by regulators in the sectors in which I work: acting where appropriate to reduce administrative and cost burdens in some areas and accelerating the timetable for regulatory approvals in others. For sure, there’s more to do, but a shared focus on improving the country’s competitiveness will reap rewards which will lift growth and benefit all people of this country
The UK financial and related professional services industry is a unique growth asset. Our speakers and panelists today will amplify the opportunities ahead and I hope you will end the day invigorated by the possibilities ahead.
Taking this library as inspiration for taking ownership of our own narrative, ask yourself what chapter will you help write in our national story?
Thank you for listening.
