Finance Sector to Play Crucial Role in UK Recovery post-COVID, says TheCityUK report

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Summary

• Industry body said that the finance sector could be an engine of UK recovery post-corona.
• It seeks higher government emphasis on digital trade in the post-Brexit free trade agreements.

A new report restated the fact that the financial services sector has an important role to play in Britain’s economic recovery from the coronavirus pandemic and Brexit. The report released on 14 April by TheCityUK has called upon the UK government to promote investment and prioritise service-based trade deals as the impact of the outbreak starts receding. TheCityUK is an industry association representing the interests of the UK’s financial and related professional services sectors.

Miles Celic, chief executive, TheCityUK said that the financial services industry has a crucial role to play as an engine of the nation’s economy’s recovery.

Intervention’s suggestion

Setting out a roadmap for the UK’s economic recovery, the report has suggested the following interventions to be made by the government:

• Higher emphasis on digital trade in the post-Brexit free trade agreements.
• The UK government should encourage nations to coordinate economic policy measures to scale up recovery.
• Attract businesses to the UK by ensuring that the tax policy changes are clear, consistent and prepared in consultation with the industry.
• Promote sustainable investments to ensure that the right incentive structure is in place.
• Relaxation of rules to enable small businesses to raise capital.
• Investment in digital identity tools and regional infrastructure.
• An increased focus on reskilling and upskilling to make people more employable.

UK’s financial services sector

According to the latest statistics, the UK’s financial services sector contributed 6.9 per cent of the total economic output of the country in the year 2019. The sector’s output was £132 billion for the year. Out of this, close to half of the total output was generated in the city of London itself, making it the financial capital of the nation.

Like other sectors, the financial sector was also impacted by the pandemic, and its economic output in November 2020 was 3 per cent less than its February 2020 level. Government’s provisional figures indicate that the sector received nearly £447 million up to 31 December 2020, under the furlough scheme.

The sector comprises of a different kind of industries under its ambit. These include banks, insurance firms, investment houses, real estate brokerage companies, consumer finance related firms, mortgage lending companies and REITs (real estate investment trusts).

Let us now take a closer look at the stock price performance of few financial sector risers at the London Stock Exchange today.

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Financial stocks in focus

JTC Plc (LON: JTC) provides services for the management of wealth and funds to institutional and private investors. The company’s shares were up 2.58 per cent to GBX 636.00 in the early morning trade on Thursday.

Clear Leisure Plc (LON: CLP) is an investment company that invests in leisure and real estate firms mainly across Italy. The company’s shares jumped to GBX 3.10 in the early morning trade from the previous close of GBX 3.05.

IG Group Holdings (LON: IGG) is a London based company providing services for trading in financial derivatives. The company’s shares jumped 0.32 per cent to GBX 948.50 in early morning trading on 15 April.