UK Financial Services Continue Fast Growth Trend in 2001 and Reinforce London’s Leading Role in World Finance
May 5, 2002
The United Kingdom trade surplus of financial services increased by £300 million to hit a record £14.1 billion in 2001 according to a report published in May 2002 by Financial Services of London -IFS. The strong performance was largely due to the insurance sector, which lifted its overseas earnings from £3.7 trillion to £4.1 trillion. UK employment in financial services also rose in 2001, increasing by 17,000 in the first nine months of the year to reach 1,082,000 in September 2001 according to the report.
The extraordinary performance of UK financial services in 2001 is due to a great extent to the ever-increasing importance of London in world finance. This city already attracts the largest share of FDI flows in Europe and is a major operation centre to over 10 thousand foreign companies. Only in London, 477 foreign owned banks own more than half of the UK banking sector assets, which in at the end of 2001 reached over £3,400bn. For this reason, the UK continues to have nearly 20% of the world share of world cross-border bank lending.
In 2000, the UK insurance market generated £174bn of net premiums, making it the third largest in the world and the largest in Europe. London alone generated premiums of over £17.7bn in the same year, and is the global market leader in aviation and marine insurance with a combined market share of 23% in 1999. London also continues to be the main centre for the world reinsurance business.
In terms of securities trading, London is the leading centre for trading in foreign equity with nearly half of the global turnover. There are more foreign companies listed in London than in any other centre, 453 with turnover of £3.7 trillion in 2001. London-based bookrunners are estimated to account for about 60% of the primary and 70% of the secondary market in eurobonds.
The importance of London as a global financial centre has also fostered the development of other services industries such as professional and support services. For instance, London is one of the two leading centres for international legal services, the other being New York. Five out of the largest ten law firms in the world are international law firms based in London. Similarly, accounting firms in the UK employed close to 70,000 qualified accountants and over 110,000 other professional or support staff in the UK in 2000. They generated overseas earnings of over £570m in the same year. Given the concentration of the leading transnational corporations in the UK, London is also a leading international centre for the provision of management consultancy services. The total revenue of UK management consultancies was estimated at £8bn in 2001. These companies employed 180,000 people in the UK at the end of 2000 and had overseas earnings of more than £890m.
For additional the complete “International Financial Markets May 2002” report can be downloaded from the International Financial Services London website at http://www.ifsl.org.uk/uploads/RP_IFM_2002_05.pdf
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