‘Welsh finance sector in danger from bad Brexit’
IF THE UK’s financial services sector is negatively impacted by a bad Brexit deal, then Wales will be one of the biggest casualties in the UK.
A new report suggests financial hubs outside of London – many of which, like Wales, voted to leave the EU – could stand to lose most if the UK’s financial services sector is negatively impacted by Brexit.
Financial services are widely recognised as playing an important role in the national economy. That they are centred in London is also well-known. But the role that both this sector and related professional services play elsewhere in the country, and the links that these activities have with the capital, are less well understood, according to the report.
The study by the think-tank Centre for Cities – supported by the City of London Corporation – London Links: The Geography of Financial Services in the Capital and Beyond, looks at how much individual cities across the UK export in services, and what proportion of these services’ exports came from the financial sector.
It finds that cities such as Cardiff (81%), Northampton (76%), Leeds (71%) and Edinburgh (69%) rely heavily on finance as their major services exporter.
Newport and Swansea also feature in the top 20 cities that rely on the industry.
Comparatively, the financial sector makes up 41% of London’s entire services exports.
Andrew Carter, chief executive of Centre for Cities, said: “Financial and professional services play an important role in the economies of Welsh cities, accounting for tens of thousands of jobs and a high share of their exports.
“Given that Cardiff, Newport and Swansea make up over half of the Welsh economy, it’s clear that a bad Brexit deal for services will have big implications across the country.
“The UK Government has outlined its plans to take services out of the EU Single Market. It should not underestimate the damaging impact that this could have on jobs and wages in Welsh cities, and across the UK.”
It is estimated that a third of all UK financial services exports go to the European Union, or approximately 36% of the total. This is followed by the US (21%), Japan (6%) and Canada (1%).
Catherine McGuinness, the policy head of the City of London Corporation, said: “The UK’s financial services sector is often associated with London’s iconic skyscrapers, but its reach extends well beyond the Square Mile’s borders.
“This data makes clear that some of the UK’s major cities rely heavily on financial services, and that a detrimental Brexit deal for the UK’s financial sector will be felt nationwide – not just in the capital.
“Government outlined enhanced equivalence plans in a Brexit white paper earlier this month. A great deal of ‘enhancements’ would need to be made to the current equivalence regime. The sector is eager to work with Government to clarify how this regime might be expanded to cater to the needs businesses and households on both sides of the Channel.”
Mr Carter added: “London is well-placed to bounce back from any post-Brexit downturn thanks to its vast labour market and business base.
“However, the worry is that many other cities – especially those outside the Greater South-East – will struggle to adapt to the potential shocks that might lie ahead.”