By Katharina Ehrhart and Fiona Morrill Researchers in the City of London Research Team
Last week, Chancellor of the Exchequer Philip Hammond in his Mansion House speech, spoke about his vision for extending “London’s position as the world’s number one international financial services centre” post-Brexit.
The City is the home of global banking
Banking is a critical part of the City’s financial and professional services ecosystem that underpins the UK’s position as a global centre for finance. Across the UK there are over 250 foreign banks, but it is in the City that the world’s banking sector clusters. Banks from 26 countries are represented here and many cluster around the Bank of England. This includes banks from North and South America (US, Canada, Brazil), from Asia (China, India, Japan), from Africa (Ghana, Nigeria) as well as the Middle East, next to banks from several European countries (Germany, France, Spain).
Banks supporting businesses and households across the UK and Europe
In the words of the Governor of the Bank of England, Mark Carney, who also spoke at the Mansion House, “The City is Europe’s investment banker, and it is leading the internationalisation of green, Islamic, renminbi and rupee finance.” Moreover, he noted that the UK banking system channelled £300 billion in finance to UK businesses and helped 700,000 households to purchase homes in 2017.
Banks’ direct contribution to the UK economy
As well as the services that banks provide, they are major direct contributors to the economy. They provide 360,000 jobs across the UK and over 96% of these jobs are in large firms. One in five of those banking jobs are based in the City.
Banks also account for £35.4bn or 5% of all government tax receipts - enough to pay for the total UK transport budget, including central government and local authority spending.
Our Total Tax Contribution research identified that more than 90% of the taxes banks generate for the UK depend on the geographical location of their operations and employees – a higher proportion than any other financial service, highlighting again, the value that banks locating in the UK bring to the country as a whole.
Sources: ONS, Business Register & Employment Survey 2016; CoLC & PwC, Total Tax Contribution of UK Financial Services, 2017; BEIS, Business Population Estimates, 2017; ukpublicspending.co.uk, Mint UK data, 2018. Mark Carney, “New Economy, New Finance, New Bank”, 21 June 2018.