The overwhelming majority of sectors experienced catastrophic losses last year, due to the COVID-19 crisis and the effects of lockdown. The UK’s financial sector was by no means immune to the harms of the coronavirus, which was also predicted to face a monumental downturn in the wake of a turbulent Brexit.
The latest figures suggest that financial firms paid a cumulative all-time record of £75.6 billion in tax contributions last year. This enormous figure comprised £41.5 billion from customers and staff, along with £34.1 billion from the finance firms directly.
The sector’s surprisingly high contribution during such a difficult year again highlights its criticality to the UK economy, along with the importance of safeguarding its future for the benefit of the country.
Lack of prioritisation in Brexit talks
Data has once again shown that while the finance sector remains a comparatively modest sector in terms of job creation, its economic contribution is disproportionately high.
Pension funds, banks, insurers, and other specialist finance companies account for around a million jobs or just 3% of the total workforce. However, the sector continuously pays approximately 10% of all employment taxes the Treasury collects each year.
It is therefore surprising that while UK-EU post-Brexit trade deal talks were underway over the past few years, the financial services sector was largely swept to one side. Even Boris Johnson stated that the resulting agreement “perhaps does not go as far as we would like” for the sector, despite its essential economic contribution.
Speaking on behalf of the City of London Corporation, policy chair Catherine McGuinness expressed disappointment “not to see the sector’s role recognised during the trade negotiations with the EU.”
“We must now move forward and focus on an ambitious dialogue that reflects the deep integration of our two markets,” she continued.
Meanwhile, the Lord Mayor of the City of London, William Russell, re-emphasised the importance of ensuring the UK upholds its global reputation for elevated regulatory standards.
“Now is the time to be entrepreneurial, to look again at how we do things, to consider how to take full advantage of our position,” he said.
“This emphatically does not mean pushing for sweeping deregulation and tax cuts in what has often been called the ‘Singapore on Thames’ model, which rather misrepresents Singapore and the reasons for its success.”