UK financial services firms are bullish about London’s future as an international finance hub post-Brexit, according to a new report from Lloyds Bank
More than two thirds of UK financial institutions (69%) believe London will retain its status as one of the world’s leading finance centres post-Brexit.
More firms also believe the competitiveness of their own sector will improve (32%) than worsen (17%) over the next 12 months. However, both groups are divided over how changes in regulations that govern the sector will affect them.
Almost half (48%) of those that believe UK financial services’ competitiveness will improve in the next year cite regulation diverging from the EU model as a key factor. Yet regulation is also cited by the three quarters (78%) who think UK competitiveness will worsen.
The findings are included in Lloyds Bank’s sixth annual Financial Institutions Sentiment Survey, which gathers views from major banks, asset and wealth management firms, insurers and intermediaries, both in London and across the UK.
Adrian Walkling, head of financial services at Lloyds Bank Commercial Banking, said: “This year’s survey emphasises the belief in London as a global centre for trade and finance as firms anticipate and adapt to the new regulatory environment. The benefit of this will resonate beyond the capital, having a positive impact on financial services firms and the communities they serve across the country.”
Firms confident on economic and sector growth
UK financial institutions’ outlook for the economy and their own sector’s prospects have improved significantly following a challenging 2020.
Almost nine in 10 (88%) expect UK economic growth to improve over the next year (up from 20% in 2020), while a third (32%) believe the UK’s economic growth will be stronger than the growth achieved by its G7 peers (7% in 2020).
More than half (51%) also expect growth in the UK financial services sector to improve over the next 12 months (13% in 2020) and twice as many firms (65%) expect their UK revenues to increase compared to 2020 (31%).
Adrian Walkling added: “Financial institutions’ confidence is on the rise as they emerge from a challenging 12 months. Following extensive investment in digitisation over the past decade, our sector was well-positioned to endure the Covid-19 pandemic, but firms still had to adapt quickly to support their customers.
“They did this by drawing on the determination of their people and the spirit of innovation that has made UK financial services world-leading. I’m confident financial services will remain a driver of our prosperity and opportunity as the recovery from the pandemic enters a new phase.”