The United States becomes the number one destination for British financial services exports

The industry’s exports appeared to be more resilient to the problems that impacted world trade. Photo: Getty Images

STRICTLY UNDER EMBARGO: 12:01 am Wednesday December 8, 2021

The US has overtaken the EU as the main destination for UK financial services exports, new data has revealed, amid Brexit and the pandemic.

A report from TheCityUK said the United States accounted for 34.2% of the sector’s exports in 2020, compared to 30%, which went to the EU.

Exports of financial services to the EU fell 6.6% to £ 24.7 billion ($ 32.7 billion) year-on-year, while exports to non-EU countries fell. rose 4.1% to £ 57.7 billion in the same period, with exports to the United States increasing 5.3%.

“Hosting one of the world’s major financial centers offers widespread economic benefits across the UK,” said Anjalika Bardalai, Chief Economist and Research Manager, TheCityUK.

“This report demonstrates the resilience and adaptability of the industry in the face of the acute challenges and changes brought about by both Brexit and the pandemic.”

But she warned that “the UK’s status as a leading financial center is under threat unless industry, government and regulators work together to boost long-term competitiveness, deepen key trade ties and focus on new areas of future global growth “.

In May, it was reported that merchandise imports from the rest of the world in the first quarter of 2021 exceeded EU imports for the first time since it started collecting data in 1997.

Last month, ONS figures showed the UK’s trade deficit widened to £ 2.8bn in September from a revised £ 1.9bn in August, as the exporters were struggling to take advantage of increased global demand.

The Brexit factor weighed on the numbers, as new border controls, supply chain issues such as queues at ports and shortages of heavy truck drivers continued.

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“Brexit is to blame for the relative weakness of goods exports. After all, the commodity breakdown shows that food and drink exports were once again among the worst performing sectors,” the then Gabriella Dickens, Senior British Economist at Pantheon Macroeconomics. .

It was reported earlier this week that the UK would seek to strengthen its trade ties with the US when Trade Minister Anne-Marie Trevelyan visits New York and Washington, but a free deal full exchange does not seem likely.

A trade deal with the United States has been touted as one of Brexit’s biggest costs, but US President Joe Biden has indicated such a deal is not a priority for him.

Meanwhile, TheCityUK report showed that the UK’s trade surplus on financial and related professional services increased to $ 101.7 billion (£ 79.3 billion) last year, up from $ 93.8 billion (£ 73.5 billion) in 2019.

The industry’s exports generally seemed more resilient to the problems that impacted global merchandise trade during the same period, according to the report.

The UK’s financial services trade surplus in 2020 was $ 80.6 billion, almost as much as the next two largest net exporters, the United States ($ 66.9) and Singapore ($ 24.8 ), which underlines the UK’s competitive position in global financial markets.

The report says the country’s fintech market generated revenues worth £ 6.6 billion and employed 76,500 people in the first half of 2020.

The average amount of capital that UK fintechs received from investors was £ 20.1million in 2019, up from £ 15million in 2017.

The study also shows that the UK has a global market share in several financial markets – for example, it holds 16% of the world’s total cross-border bank lending.

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