Scottish financial services’ exports strike record year

L £7.2 billion of services exported in 2016 partly on back of sterling weakness

Scotland has seen an export boom in financial and related professional services, an influential City of London report out today reveals.

The report from Thecityuk, the UK’S leading financial services trade body, says the sector in Scotland had a record year in 2016, with exports up 9 per cent to £7.2 billion.

Uk-wide financial and related services’ exports climbed 15.8 per cent to £95.7bn. Scotland’s was the third best exports performance after London, the English capital up 17 per cent at £46.6bn, and the South East of England, up 10 per cent at £11.6bn.

Thecityuk report – Exporting from across Britain – says financial services’ exports were equivalent to over half (56 per cent) of the industry’s total output in Scotland in 2015.

Anjalika Bardalai, chief economist and head of research at the trade body, said: “While London is an important piece of the puzzle, over half the industry’s exports come from elsewhere – £7.2bn from Scotland alone.

“In 2016, industry exports saw double-digit growth in nearly every part of the country. It’s this collective national contribution which helps to make the UK the world’s leading international financial centre.”

The North-west of England was in fourth place in terms of exports from the wider sector, with a 13 per cent rise in 2016 to £6.6bn.

Takentogether,scotlandand the North-west alone exported financial services worth almost three-quarters of the financial services exports of France as a whole.

The UK is the world’s leading net exporter of financial services, with a trade surplus of $77bn (£57bn) in 2016. This is nearly twice that of the next leading country, the US, at $41bn (£31bn).

Bardalai told The Scotsman that in specific terms it was “difficult to say” what had given the tailwind to financial services exports in Scotland and the rest of the UK in 2016, the latest year for which figures are available.

She said that the depreciation of sterling in the second half of 2016 after the Brexit vote in June “might have helped” financial services and wider UK trade, but that wouldn’t have affected the performance in the first six months of the year.

However, she said there were “absolutely” good grounds for optimism for the coming year given expectations of strong global demand.

“We saw a bit of growth in 2016, not amazingly strong on the previous year, but ok,” Bardalai added. “But there are positive points in the near term. Global demand is projected to be extremely strong in 2018.”

Asked if Brexit could throw robust UK financial services exports off course, Bardalai said it was premature to judge. “It is too early to say. On current plans it (the UK’S withdrawal from the EU) would not happen until at least 2019,” she said.

“Much will depend on the shape of the final agreement.”