Financial services leaders see brighter future for sector under new government
Two thirds of UK financial services leaders more optimistic about the sector’s future growth and global standing under the new government.
Two thirds of UK financial services leaders more optimistic about the sector’s future.
- Two thirds of UK financial services leaders more optimistic about the sector’s future growth and global standing under the new government.
- Most leaders are planning to increase their presence outside London in the next five years, with more than half opening new offices outside the capital.
- Majority are confident on business growth and profitability this quarter but cite attracting overseas talent and innovation as critical to the sector’s future.
Two thirds (67%) of financial services leaders are more positive about the sector’s future growth under the new government, according to KPMG’s latest UK Financial Services Sentiment Survey.
The quarterly poll, which was conducted after the General Election, tracks sentiment among over 150 leaders working across banking, insurance, asset and wealth and private equity. It also found that the sector is now more optimistic about its future on the global stage. Almost two thirds (61%) of leaders feel more positive about the global competitiveness of UK financial services under the new government.
When asked why they were more optimistic, almost a quarter (23%) said the new government has good relationships with industry bodies and regulators, followed closely by a fifth saying the new government has a clear plan to grow financial services (22%).
Karim Haji, global and UK head of financial services at KPMG, said: “A change of government always marks a new chapter for the country and one of its most important sectors. Most financial services leaders are expecting a brighter future under the new government, buoyed by both the prospect of national change and continuity of financial services policy and reform.
“In the coming weeks and months, the sector will want to see more details emerge on the government’s strategy for financial services, greater partnership between it and sector leaders to collaborate on addressing challenges and a co-ordinated plan to strengthen the UK’s competitiveness as a global financial centre.”
Most UK financial services firms to increase footprint outside of London
KPMG’s survey also found the vast majority (90%) of leaders plan to increase their footprint outside of London in the next five years. Over half (57%) plan to open new offices outside the capital and 48% say they will expand existing regional offices.
Almost a quarter (23%) plan to expand across the East of England, followed by 18% eyeing expansion in Scotland and the Yorkshire and Humber respectively.
Despite their own plans, Manchester was the city outside of London cited most (47%) by leaders as having the greatest potential to be the UK’s second city for financial services, followed by Birmingham (20%) and Edinburgh (11%).
On top of their own expansion plans, more than a third of leaders (39%) say that the regional expansion of their global counterparts outside of London would most support financial services growth across the UK. A quarter felt that greater investment in regional infrastructure would boost sector growth outside of London, followed by 22% saying that local government needs to have more powers to support financial services clusters to help boost the sector’s presence across the country.
Katie Clinton, Partner, Head of Regional Financial Services at KPMG UK, said: “This is a vote of confidence for the vibrant and fast-growing financial services hubs outside of London. To fully realise the opportunity they offer the sector, investment in the infrastructure and talent underpinning their expansion is sorely needed.
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Cities like Manchester, Birmingham and Edinburgh have long been snapping at London’s heels, so it’s great to see firms are also planning to increase their presence in areas outside of urban centres. This will not only offer a boost to more local economies, but help firms to benefit from a greater diversity of experiences and skills sets.”
Leaders bullish on growth this quarter, but say the UK needs to focus on innovation and attracting overseas talent to support sector’s future
Looking to the rest of Q3, most sector leaders are confident about business growth (87%) and profitability (88%) over the period, driven by increased demand for products and services (49%), new technology (45%) and plans to enter new markets (41%).
Leaders also called out specific areas of focus to ensure sector growth over the next five years. Almost a quarter (23%) said innovation to help solve environmental and socio-economic changes such as climate change and ageing populations was needed. This was followed by 21% saying more effort was required to make the UK more attractive to overseas talent through infrastructure investment, housing and immigration changes.
Just nine percent of leaders feel that efforts to increase the volume of businesses listing on the London Stock Exchange would most support the sector over the next five years.
Karim Haji, added: “Despite all of the discussion and much needed industry focus on making London a more attractive listing destination in recent months, it’s clear that innovation and attracting talent should be given equal billing if the sector’s positive growth expectations are to be realised in the long term.”
ENDS
Methodology
Online quantitative research conducted by Opinium on behalf of KPMG between 5th July – 10th July 2024 of 150+ UK adults who are director level and above in financial services companies.
About KPMG UK
KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 18,000 partners and staff. The UK firm recorded a revenue of £2.96 billion in the year ended 30 September 2023.
KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 273,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.