Singapore Markets open in 6 hrs 39 mins

US becomes top destination for UK financial services exports

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • GBPUSD=X
  • USD=X
  • GBP=X
Industry exports appeared to be more resilient to issues which impacted global trade. Photo: Getty Images
Industry exports appeared to be more resilient to issues which impacted global trade. Photo: Getty Images

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

A report by the TheCityUK said the US accounted for 34.2% of sector exports in 2020 compared to the 30%, which went to the EU.

Financial services exports to the EU were down 6.6% to £24.7bn ($32.7bn) year-on-year, while exports to non-EU countries rose by 4.1% to £57.7bn in the same period, with exports to the US rising by 5.3%.

“Hosting one of the world’s leading financial centres provides widespread economic benefits right across the UK,” said Anjalika Bardalai, chief economist and head of research, TheCityUK.

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

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

Back in May it was reported that imports of goods from the rest of the world in the first quarter of 2021 were higher than EU imports for the first time since it began 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 exporters struggled to capitalise on a global bump in demand.

The Brexit factor weighed on numbers, as new border checks, supply chain issues such as queues at ports, and a shortage of HGV drivers continued.

Read more: FCA to introduce new consumer duty

"Brexit is to blame for the relative weakness of goods exports. After all, the commodities breakdown shows that food and beverages exports once again were among the worst performing sectors," Gabriella Dickens, senior UK economist at Pantheon Macroeconomics said at the time.

It was reported earlier this week that the UK will seek to strengthen its trading relationship with the US as trade minister Anne-Marie Trevelyan visits New York and Washington, but a full free-trade agreement does not seem likely. 

A trade deal with the US was talked up as being one of the biggest prizes of Brexit, but US President Joe Biden has indicated any such deal is not priority for him.

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

Industry exports generally appeared to be more resilient to issues which impacted the global trade in goods during the same period, the report said.

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

The report said the country’s fintech market generated revenue worth £6.6bn and employed 76,500 people as of the first half of 2020.

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

The study also said the UK maintains a globally leading share across several financial markets – for example, it has 16% of the global total of cross-border bank lending. 

Watch: What are freeports?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting