It is now time to put fi­nan­cial ser­vices front and cen­tre

The Daily Telegraph - Business - - Business Comment - OMAR ALI Omar Ali is the head of UK fi­nan­cial ser­vices at EY

As the dust set­tles on the Bud­get, the worlds of pol­i­tics and busi­ness have in­evitably turned back to Brexit. The rumours this week around equiv­a­lence for ser­vices are en­cour­ag­ing, but the in­dus­try is now look­ing for th­ese to ma­te­ri­alise into a con­crete agree­ment.

Get­ting a good deal for fi­nan­cial ser­vices is crit­i­cal, but for the sec­tor to flour­ish, and to be in the best po­si­tion to sup­port growth at home and keep the econ­omy in a lead­ing role on the global stage, we need to think about joined-up, long-term do­mes­tic poli­cies that sup­port the sec­tor.

This is cru­cial for us all. Lead­ers across fi­nan­cial ser­vices talk about the di­rect con­tri­bu­tion the sec­tor makes to the econ­omy. The sec­tor is proud to em­ploy over two mil­lion peo­ple, pay more tax than any other in the UK and last year gen­er­ated a trade sur­plus of £68bn – the largest of any coun­try. In 2017, the fi­nan­cial ser­vices sec­tor con­trib­uted £119bn to the UK econ­omy, 6.5pc of our en­tire eco­nomic out­put. This is vi­tal rev­enue that helps pay for our schools and hos­pi­tals, and bal­ances an econ­omy that is heav­ily de­pen­dent on im­ports else­where.

It is rarer to hear peo­ple talk about the sec­ondary im­pact of hav­ing a world-lead­ing fi­nan­cial ser­vices sec­tor, which will be even more im­por­tant post Brexit. Fund­ing the in­fra­struc­ture the UK needs to re­main com­pet­i­tive, en­abling the digi­ti­sa­tion of the econ­omy, lead­ing the way on green fi­nance and em­bed­ding sus­tain­abil­ity across the cor­po­rate world, all of th­ese will be de­liv­ered faster if we con­tinue to have world-class fi­nan­cial ser­vices.

So, how do we en­sure fi­nan­cial ser­vices is as suc­cess­ful as it can be?

A 21st-cen­tury econ­omy de­mands a mod­ern in­fra­struc­ture. To com­pete at a world-class level we need do bet­ter. In our 2018 UK At­trac­tive­ness sur­vey, for­eign in­vestors in fi­nan­cial ser­vices voiced in­creas­ing con­cerns about our in­fra­struc­ture. The ex­tra sup­port for our road net­work an­nounced in the Bud­get is wel­come, but govern­ment com­mit­ment to im­prov­ing our dig­i­tal in­fra­struc­ture is what in­vestors and busi­nesses are re­ally look­ing for.

We need to main­tain our rep­u­ta­tion as hav­ing the best en­vi­ron­ment for in­no­va­tion. An EY study of fin­tech clus­ters ranked the UK top for its pol­icy en­vi­ron­ment last year. This is in­cred­i­bly valu­able for brand Bri­tain but is some­thing we will need to work hard to pro­tect as other coun­tries are in­vest­ing time and money to try to over­take the UK. Get­ting peo­ple with the right skills is the sin­gle most im­por­tant fac­tor for the UK’s long-term com­pet­i­tive­ness in all sec­tors, not just fi­nan­cial ser­vices. Against this back­drop it is clear that the cur­rent im­mi­gra­tion sys­tem is not fit for pur­pose. We have worked closely with TheCi­tyUK on this is­sue, and have pro­posed so­lu­tions that could help busi­ness at­tract the tal­ent it needs. For ex­am­ple, a rel­a­tively easy fix would be a flex­i­ble short-term im­mi­gra­tion cat­e­gory to en­able staff to trans­fer to their UK of­fice for up to six months, with­out need­ing to ap­ply for a visa. Clearly any im­mi­gra­tion sys­tem needs to go hand in hand with de­vel­op­ing the skills of our own work­force and I wel­come the Chan­cel­lor’s an­nounce­ment to cre­ate a task force to set out what the sec­tor needs.

A stronger fi­nan­cial ser­vices in­dus­try would con­tinue to drive in­vest­ments into tech­nol­ogy, cy­ber and re­silience that will ben­e­fit the whole econ­omy.

UK con­sumers and busi­nesses would have ac­cess to first-class ser­vices and prod­ucts across lend­ing, sav­ing and pen­sions. Prod­ucts that are eas­ier to un­der­stand and man­age, that are more ac­ces­si­ble and per­form at a bet­ter price point than in other mar­kets.

The in­dus­try cur­rently sup­ports 2.2m skilled jobs. The peo­ple who work in th­ese roles would have ac­cess to life­long learn­ing in the skills that we as a na­tion will need to com­pete glob­ally.

A world-class dig­i­tal pay­ments and bank­ing sys­tem lays the foun­da­tions for the digi­ti­sa­tion of the broader econ­omy. Fi­nan­cial ser­vices across the world are at the fore­front of the fight against cy­ber­crime. En­sur­ing that the UK has the skills needed to pro­tect our fi­nan­cial ser­vices in­dus­try will up­skill the wider econ­omy and en­sure that we have the safest, most se­cure fi­nan­cial ser­vices that will drive trust and un­der­pin fu­ture eco­nomic growth. Look­ing be­yond tech, the fi­nan­cial ser­vices in­dus­try is also at the heart of push­ing for greener, more sus­tain­able busi­ness across the UK. Mak­ing sure the UK main­tains its lead in cre­at­ing green fi­nance prod­ucts, and that the in­dus­try con­tin­ues to chal­lenge the boards of the com­pa­nies they in­vest in about the long-term value and sus­tain­abil­ity of their busi­ness mod­els, will pay div­i­dends fi­nan­cially and re­sult in a safer, more ro­bust econ­omy.

Th­ese are wor­ry­ing times for those who care about the UK’s global stand­ing. Our re­cent EY Brexit Tracker showed that 77 lead­ing fi­nan­cial ser­vices firms have al­ready con­firmed they are mov­ing op­er­a­tions of staff to else­where in Europe.

The co-lo­ca­tion of lead­ing tech­nol­ogy and fi­nan­cial ser­vices in the same cities in the UK is an in­cred­i­ble com­pet­i­tive ad­van­tage that we should make sure we pro­tect.

Brexit is un­doubt­edly a worry – we need the right deal – but there is much more scope to make pos­i­tive do­mes­tic pol­icy changes than the cur­rent bi­nary com­men­tary around Brexit sug­gests.

The fi­nance sec­tor has proven it­self to be re­mark­ably adap­tive, in­no­va­tive and will re­main a key part of the econ­omy. How­ever, if we cre­ate an en­vi­ron­ment where fi­nan­cial ser­vices can flour­ish we will be lay­ing the foun­da­tions for a re­ally strong dig­i­tal, green and highly skilled econ­omy.

‘A stronger fi­nan­cial ser­vices in­dus­try would con­tinue to drive in­vest­ments into tech, cy­ber and re­silience’

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