Business Spotlight: TheCityUK grapples with recovering, rebalancing and revitalising
5 November 2020: Recovering, rebalancing and revitalising – these are the three themes on the mind of Marcus Scott, Chief Operating Officer of TheCityUK. He explains what they mean for the profession.
Financial and related professional services contribute over 10% of the UK’s total economic output. The sector is the largest taxpayer and employs a staggering one in 14 people across the country – a total of 2.3m people. About half of this number is employed in financial services and the other half in professional services. Not only that, two-thirds of these are employed outside London.
In fact, there are seven major UK cities which host around 30,000 people employed in these industries. What is more, the sector is the biggest UK exporting industry, generating a trade surplus equivalent to all other net exporting industries combined.
TheCityUK is the body that represents all this. It was set up in the wake of the financial crisis to tackle the big questions surrounding the UK’s retention of its position as a global financial centre, built since the war and punching above its weight as an exporter of services compared with New York, its closest rival.
In terms of its work around recovery, TheCityUK is about to publish its ecosystem recovery plan. This plan asks what is the industry’s role – including that of accountancy – in the recovery of the UK’s economy?
“The industry provides vital services and will help companies recover from the COVID crisis,” says Scott. “The plan will reflect TheCityUK’s work over the last 10 years, drawing comparisons between current challenges and those around the financial crisis when we were set up.”
He reminds us that the UK economy is now 80% comprised of services – and that our services exports really do underpin the UK economy as a whole. “The UK is particularly good at exporting services, not just financial services but also the creative and music industries, for example,” he says.
What enables the UK to be such a significant exporter of financial services and London to be global financial centre? Expertise, built over the centuries, he responds, but he also points to the use of English law to underpin contracts internationally, and to London as a centre for dispute resolution around the world.
TheCityUK’s thinking around rebalancing is all about the financial and related professional services footprint around the UK. This means thinking about where these jobs are located around the UK and the contribution of the different regions. “When we were looking at the ONS data on the export of financial services and professional services, we discovered that 48% of the exports in financial services are from outside London which we were very surprised at,” says Scott.
He points to Birmingham for its expertise in professional services like accountancy, and Manchester which ranks second for legal services after London, as well as all the talent for back-office operations in Newcastle. Breaking the sector down by sub-sector and city starts to bring the numbers to life but Scott is cautious.
“We need to make sure that those big centres around the UK are creating jobs in the right numbers,” says Scott. “We are particularly concerned about productivity which has been a big struggle for the UK. We need to understand how those jobs outside the UK contribute to productivity. And we need to see how the regions contribute to the rebalancing of the UK economy as a whole.”
Then comes revitalising bit, and Scott describes this as “forward looking, across innovation, transformation and leadership”. It includes issues such as fintech, the decarbonisation agenda and build back better.
He identifies numerous opportunities for the UK as experts in trading new assets, such as green investments, but first you need to develop performance indices, Scott says. “Then you need markets in which those assets can be freely traded. In the same way London has become the centre of renminbi trading, euro clearing and the derivatives market, so too it has the potential to become a green asset marketplace. But there are a few stages before we can get to that point,” he says.
So, what is the role of the profession in all this? “We are very lucky that we have the Big 4 headquartered in the UK,” says Scott. He points to the value of the ACA in business as well as in practice. “ACA-qualified professionals take their expertise out into the wider world. What they do is not just about internal controls, audit and financial reporting. It is also about understanding business and the forward-looking elements of that business.”
Yes, there are challenges for the profession and, he says, they revolve largely around the use of artificial intelligence, blockchain and data analysis. “How ICAEW provides ongoing training is important,” he says, especially if you took the ACA 30 years ago. “It is important to remain relevant.”
COVID aside, the other elephant in the room is Brexit. “Our starting point is that we need there to be some kind of a deal, even if it not very comprehensive – we will fight tooth and nail for this,” he concludes.
Marcus Scott will be chairing a FinTech leaders panel session at TheCityUK National Conference 2020, which runs from 17-19 November.