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UK financial sector challenges
Economy

How the UK financial sector is faring after Brexit

09.05.2024
2 min read

UK financial sector: challenges and prospects

Anglo Scottish Finance has published an analysis in which experts assess the UK’s financial sector. They looked at the impact of Brexit on market processes. Recall that the UK’s exit from the European Union occurred in 2020.
According to the document, leaving the European Union did not become a severe constraint to the country’s financial sector. It did not put as much pressure on the financial services segment as experts had assumed. However, despite the good results, the industry still feels the problems associated with Brexit. First of all, there is the need to expand international trade relations. Currently, they are insufficient to compensate for the decline in business with EU countries.

What has changed in the sector since leaving the EU?

Before leaving the EU, experts warned that the financial sector could lose significant players. At the time, surveys showed that:
– among large UK financial services firms, 44% planned to operate part of their business in the EU;
– 37% in the fintech sector.
More than 80% of companies left the UK after Brexit. In recent years, however, experts have noticed the opposite trend. Many companies, including the Dutch new bank Bunq, have returned to the country. It is the second largest in the European Union.
At the end of 2023, the UK and Switzerland signed a financial services agreement. It aims to strengthen cooperation between the two major banking centres. Analysts note that this partnership was previously impossible.UK financial sector  In terms of attracting foreign capital, the UK led Europe in 2022, according to the industry analysis. The financial services sector received more than £2 billion during this period. This flood of investment has contributed to an increase of almost 15,000 jobs in the industry.
Wage growth in the sector has slowed since 2023 due to falling vacancy rates. However, employers are doing their best to attract skilled workers to the UK. One of the key steps in doing this could be changes to the rules governing the sector. EU rules are now in place. These give the employer the right to offer a candidate a bonus 100% higher than the salary.
The financial sector accounts for about 20% of the country’s total services exports. From 2018 to 2021, the sector experienced difficulties:
– exports of this type to EU countries fell by 18%;
– financial services exports to other countries grew by only 4%.
The dynamics of the international trade sector are important to assess regarding the impact of the pandemic and global trends.

Outlook for the sector

Despite declining volumes after leaving the EU, the financial sector continues to look for ways to improve. For example, new trade agreements with Korea, India and other countries have been announced. In addition, London remains an essential centre for fintech innovation. Its development is one of the priorities for strengthening the financial market.

Tags: Economy
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