‘Investment magnet’ financial services injected £281bn in UK economy
Financial services injected £281bn into the UK economy and accounted for around 2.5m jobs, according to a new industry-led report.
The sector, which is an essential component of business in the Square Mile and manages trillions of pounds in assets, has had to steer through several rocky years of Brexit negotiations, a pandemic and tariff turmoil.
Now a new report by TheCityUK has suggested that financial services has been established as an engine for UK economic growth in the years after the UK left the European Union.
Research highlighted that economic output in financial services hit £281bn in 2024, boosting gross value-added, which is used to calculate UK growth figures.
Productivity levels – or output per hour – in financial services is nearly three times as high as that generated by the whole economy, TheCityUK also said.
The average output generated by the whole economy was £39.30 an hour in 2023.
Financial services appear to have pushed the UK figure higher than it would have otherwise been given just seven areas of the economy were higher than the national average compared to several more sectors producing less each hour.
International investment ‘magnet’
UK financial services has also now attracted a cumulative total of £51.2bn in foreign direct investment in the four years leading up to 2024, largely driven by a spike in 2020.
Industry group TheCityUK chief economist Anjalika Bardalai said financial services were a “strong magnet for international investment” and adapted quickly to changes in demand, with more consumers looking for technology to help with decision-making.
“At a time of domestic and international policy upheaval, recognising the industry’s wide-ranging contribution is an essential foundation for developing strategies that will safeguard and strengthen its competitiveness, ensuring that it remains a driver of UK prosperity,” Bardalai said.
Small and medium-sized firms are also taking in large amounts of cash from lenders as they made up a third of a total £541bn borrowed by businesses as of January 2025.
London accounts for around 900,000 jobs, with a further 1.6 workers in financial services and related professions, such as law and management consultancy, spread around cities such as Birmingham and Manchester.
The government is heavily dependent on financial services for generating income to spend on the NHS and defence.
The report said tax contributions totalled £110.2bn in 2023 though payments as a share of total tax receipts has fallen from 14.6 per cent in 2016 to 12.3 per cent two years ago.