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The outcome of the Brexit referendum on 23 June 2016 has raised many questions, including the evaluation of the ex-ante costs to the UK, the negotiation of new trade agreements, and the implications of reducing freedom of movement in the UK labour market. Yet, one of the most talked about issues relates to the potential threats to the financial services industry and the City. While there are many views and tentative assessments of the economic impact of Brexit on the UK financial industry, the uncertainty is substantial.
The financial services industry and the UK economy
The financial services industry, including banking, insurance, asset management and ancillary activities, is one of the UK’s main industries. According to government estimates, as per the end of 2014, the UK financial sector contributed £126.9 billion in gross value added (GVA) to the UK economy, or 8.0% of total value added. The financial services sector employs 1.1-1.3 million people, representing around 4% of the UK's total workforce. In addition, in 2013-2014, the financial services sector accounted for 11.5% of total government receipts according to the Office for National Statistics. While estimates vary, it is clear that the financial services industry makes a very substantial contribution to the UK economy.
