Growth in UK financial services exports to the EU at a headline level obscures some divergent country-specific trends.
In this blog post last year, I analysed trends in overall financial services exports to the EU over the past several years. We found at the time that financial services exports to the EU had been fairly steady, with annual average growth of 2.9% over 2016-2022.
TheCityUK’s recent Anglo-Italian Financial Services Dialogue, part of a series of bilateral financial services dialogues, gave us the opportunity to update this analysis. We find that between 2016 and 2023, financial services exports from the UK to the EU increased by almost 50%, thanks to a 22% surge in growth in 2023:
UK financial services exports to the EU, 2016-2023
Source: TheCityUK calculations based on Office for National Statistics data.
However, within those headline figures, there were considerable country-specific differences. Over the period, UK financial services exports to Spain and Italy were relatively flat, remaining at an average of about £1.4bn (Spain) and £1.6bn (Italy) per year. Exports to the Netherlands showed a modest decline, from £4.8bn in 2016 to £4.4bn in 2023 (although this decline wasn’t steady; in 2019 exports reached as much as £3bn, but the overall trend for the period was downwards). Meanwhile, exports to Ireland and Luxembourg grew strongly, from around £3bn to each country in 2016 and reaching £5.6bn to Ireland and £6.5bn to Luxembourg in 2023:
UK financial services exports to key EU countries, £m, 2016-2023
Source: TheCityUK calculations based on Office for National Statistics data.
These trends are then reflected in EU countries’ positions as export markets for UK financial services. Luxembourg and Ireland are the largest EU destinations for UK financial services exports, accounting for 6.1% and 5.2% respectively of total industry exports in 2023. France was a close third, accounting for 5% of the UK’s financial services exports:
UK financial services exports by destination, 2023
Source: TheCityUK calculations based on Office for National Statistics data.
As a bloc, the EU accounts for 31% of the UK’s financial services exports. The US is the largest destination for UK financial services exports, accounting for about a third of the total. But the US is something of a special case, not only because of the vast size of its economy and market, but also because of the unique nature of financial services trade between it and the UK, which I have written about here. It is significant that Luxembourg, Ireland and France are not only the largest EU importers of UK financial services, they are, in fact, the largest importers of UK financial services globally, with the (outlier) exception of the US. Their combined share of UK financial services exports is 16%; considering non-EU export destinations besides the US, one would have to consider the top seven countries to reach the same share (Canada, Switzerland, Australia, Japan [as seen in the chart above] as well as Hong Kong, Singapore and China [all with individual shares of less than 2%]).
In an upcoming blog post, I will look beyond the EU and the US to delve deeper into which countries are responsible for the UK’s recent growth in financial services exports (rather than merely the destination of exports).
