State of the sector 2024

The UK’s financial services industry is in a strong position: in many aspects, it leads the world.

£294bn produced by the FS industry in GVA in 2023

The UK is a global financial hub for insurance, international banking, asset management, bond issuance and trading, and equity capital raising. Global investor capital continues to flow, in hot pursuit of UK businesses. However, in this highly competitive marketplace, other global financial centres are stepping up.

Therefore, it is critical that the UK broadens its trade opportunities. Trade agreements such as the UK-Switzerland Mutual Recognition Agreement open doors to new growth. The Mansion House Reforms were introduced in 2023 to release capital into more productive, high-growth potential companies and boost investment in the UK.

This report reviews the past year in financial services. It uses a wide range of metrics and industry engagement to analyse the UKs position in financial services. It highlights the industry’s many successes, but also reveals opportunities to boost growth and improve international competitiveness.

Raising investment and boosting growth

$1.1tn (USD) of international bonds were issued in the UK

The UK is the world’s leading international finance hub for raising investment.

In 2023, British and international companies raised over £1tn through bonds and £17bn through equity issuance. The UK’s FS expertise and accommodating regulatory regime enables businesses to access the capital they need to grow. Increasing investment into UK companies, particularly from UK investors, would boost growth and this would in turn make the UK more attractive to further investment. High profile promotion of the UKs FS industry would also help to attract investment and boost growth.

The UK leading in sustainable finance

The UK is the world’s leader in sustainable finance. UK companies have leapt into action to achieve net zero targets, which has in turn generated an ecosystem of best-in-class advisors and experts in emissions reduction.

$26bn of green bonds issued in the UK in 2023

The FS industry also has world-leading expertise in financing and insuring green, sustainable and social impact projects, which is in high demand around the world.

UK investors are keen to invest in sustainability and social impact. But we need to make sure that UK financing and expertise reaches the right projects.

A digital first economy

The UK is the largest and most important tech ecosystem in Europe. It provides a competitive base for startups and innovative companies, particularly in FS.

£10bn invested in fintechs by PE/VC investors in 2023

But the UK lacks the investment firepower to take fast-growing companies into the ‘scale-up’ stage. Seed capital and Series A investment is available, but scale-up capital often comes from big US venture capital investors.

For the UK to grow in this area, it is necessary for institutional investors such as pensions, insurers and endowments to invest in tech companies at the ‘scale-up’ stage. This will then allow for high potential companies to remain and thrive in the UK.

Supporting the conditions for growth

The UK FS industry generally has a positive view of the UK’s regulatory regime. Additional investment in people and technology has improved regulatory operations.

25% of workers in financial services were born outside of the UK in 2023

However, the industry is feeling overburdened by regulatory changes and requests for information. A bidding war for compliance and legal talent emerged as firms strive to accommodate regulatory updates. FS firms have reported the increasing cost of responding to regulatory information requests, with one firm reporting a cost in excess of £600k.

FS industry growth is also being held back by a risk-averse culture within regulators, which is reducing investment in high-growth potential markets such as tech and sustainable finance.

£35bn

predicted to add to FPS sector in the next five years as a result of the introduction of AI

£35bn

25%

of workers in financial services were born outside of the UK in 2023

25%