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Financial services sector hits record trade surplus

Published 01/11/2016

A report by TheCityUK revealed that the UK's trade surplus in financial services rose by £185 million year-on-year to hit a record £63.4 billion in 2015
A report by TheCityUK revealed that the UK's trade surplus in financial services rose by £185 million year-on-year to hit a record £63.4 billion in 2015

Britain's financial services sector has achieved a record trade surplus, underscoring the economic value of the industry as it faces an uncertain future from Brexit.

A report by TheCityUK revealed that the UK's trade surplus in financial services rose by £185 million year-on-year to hit a record £63.4 billion in 2015.

The strength of financial services exports has helped constrain Britain's ballooning trade deficit, which reached minus £38.7 billion last year.

The figures come as the financial services sector waits with bated breath to discover whether or not the Government will opt for a so-called "hard Brexit" and pull Britain out of the European single market.

Chief executive Miles Celic said the industry had made its "most significant contribution to UK exports" since the Big Bang sent technological change sweeping through the capital's financial district 30 years ago.

However, he said it was imperative the Government secured a "mutually beneficial" Brexit deal for Britain and the EU so industry could continue to thrive.

"[Britain's financial services sector] is a national asset and its continued strength is fundamentally linked to a strong and thriving economy," he said.

"It is also a European asset given its role as Europe's financial centre, which is why ensuring a deal which is mutually beneficial for the EU and the UK and ensuring stability and certainty to the extent possible and protecting the interests of the industry's customer and clients is in everyone's interests."

A previous report by TheCityUK suggested that a ''hard Brexit'' could cost the City of London 75,000 jobs.

Industry concerns centre on the UK's membership of the single market and whether it will continue to have access to the bank passporting system.

Banks and financial firms wanting to trade with a country in the European Economic Area (EEA) must apply for a passport, which allows them to sell their products to any country within the EEA.

Key financial centres in Frankfurt and Paris have been encouraging heavy-weight financial firms to shift their operations away from London after Brexit to maintain smooth trading across Europe.

France is said to have appointed a team of corporate leaders and politicians to drive its campaign, according to the Financial Times.

Anthony Browne, chief executive of the British Bankers' Association (BBA), said in October that banking bosses had their hands ''poised quivering over the relocate button'' as Britain embarks on its exit from the EU.

Speaking about the trade surplus, Dr Liam Fox, the Government's international trade secretary, said: "As we champion free trade and build new global relationships, we are supporting businesses to seize this unique opportunity to attract investment and expand into new markets.

"Financial services are already leading the way for other sectors to follow."

Labour MP Stephen Kinnock, of the Open Britain campaign, said: "This excellent news highlights just how important the financial services sector is to our economy and our balance of trade. It reinforces the fact that the Government must aim for the very best deal for the City in its negotiations with the EU, which means unfettered access to the single market.

"TheCityUK have previously shown the dangers to UK financial services of losing our passporting rights, which allow our firms to do business in Europe.

"To protect jobs, public services and economy stability, we need a Brexit deal that keeps the single financial passport, and retains unfettered access to the EU single market."

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