Two-thirds (67%) of financial services leaders are more optimistic about the sector’s growth under the new Labour government, according to KPMG’s latest UK Financial Services Sentiment Survey.
This survey polled over 150 leaders in banking, insurance, asset and wealth management, and private equity. It found that 61% of leaders are also more positive about the global competitiveness of UK financial services under the new government.
When asked about their optimism, nearly a quarter (23%) cited the new government’s strong relationships with industry bodies and regulators, and 22% pointed to the government’s clear plan for growing financial services.
Karim Haji, Global and UK Head of Financial Services at KPMG, said, “A change of government always marks a new chapter for the country and one of its most important sectors. Most financial services leaders are expecting a brighter future under the new government, buoyed by both the prospect of national change and continuity of financial services policy and reform.
“In the coming weeks and months, the sector will want to see more details emerge on the government’s strategy for financial services, greater partnership between it and sector leaders to collaborate on addressing challenges and a co-ordinated plan to strengthen the UK’s competitiveness as a global financial centre.”
The survey also found that 90% of leaders plan to expand outside London in the next five years. Over half (57%) intend to open new offices outside the capital, and 48% plan to expand existing regional offices.
Additionally, more than a third (39%) believe that the regional expansion of their global counterparts would best support financial services growth across the UK. A quarter think that more investment in regional infrastructure would boost sector growth, while 22% say local governments need more powers to support financial services clusters.
Katie Clinton, Partner, Head of Regional Financial Services at KPMG UK, noted, “This is a vote of confidence for the vibrant and fast-growing financial services hubs outside of London. To fully realise the opportunity they offer the sector, investment in the infrastructure and talent underpinning their expansion is sorely needed.
“Cities like Manchester, Birmingham and Edinburgh have long been snapping at London’s heels, so it’s great to see firms are also planning to increase their presence in areas outside of urban centres. This will not only offer a boost to more local economies, but help firms to benefit from a greater diversity of experiences and skills sets.”
Looking ahead to the rest of Q3, most sector leaders are confident about business growth (87%) and profitability (88%), driven by increased demand for products and services (49%), new technology (45%), and plans to enter new markets (41%).
Leaders also highlighted key areas for ensuring sector growth over the next five years. Nearly a quarter (23%) emphasised the need for innovation to address environmental and socio-economic challenges such as climate change and ageing populations. Another 21% stressed the importance of making the UK more attractive to overseas talent through investment in infrastructure, housing, and immigration changes.
Only 9% of leaders felt that efforts to increase the number of businesses listing on the London Stock Exchange would most support the sector over the next five years.
Haji concluded, “Despite all of the discussion and much needed industry focus on making London a more attractive listing destination in recent months, it’s clear that innovation and attracting talent should be given equal billing if the sector’s positive growth expectations are to be realised in the long term.”
