Duncan McKenzie, Head of Research, TheCityUK
The UK economic environment has been overshadowed by the snow-affected preliminary GDP estimate for the fourth quarter of 2010, not to mention scaling back of public expenditure. The full picture for UK growth in Q4 is yet to be revealed, but other recent evidence in the financial sector is more positive:
Business volumes up
The CBI /PwC survey indicated that growth in financial services was sustained in Q4 for the sixth survey in succession with firms expecting growth to be sustained during the first quarter of 2011.
Recovery in employment
Pointers to improvements in the general picture for employment come from three different sources:
Pointers to improvements in the general picture for employment come from three different sources:
- At the national level UK financial services has begun to show an upturn: rising by 17,000 to 1,014,000 in the six months to Q3 having dropped by 93,000 during 2009 to a trough of 997,000 in Q1 2010.
- City job vacancies in London experienced a seasonal decline in the final quarter, but over the year as a whole City vacancies picked up from a low point of 42,000 in 2009 to over 61,000 in 2010. Encouragingly, Morgan McKinley survey found that confidence was improving amongst employers and appetite for hiring was on the rise. A further increase to 80,000 therefore seems to be on the cards for 2011. A peak of 114,000 vacancies was reached in 2007.
- Newly employed FSA approved people saw a 15% rise to 3,901 in Q4 from 3,402 in Q3, the first quarterly rise of any significance since before the recession.
Growing FSA authorisations of firms
The number of new firms authorised by the FSA has doubled from a low point of 174 to 353 between the fourth quarters of 2009 and 2010. Authorisations are on track to return in the second half of 2011 to average quarterly figure of 460 prevailing before the financial crisis. Growth has included FSA authorisations of foreign companies: these totalled 62 for all of 2009 and reached 49 in the first half of 2010 alone.
Strong trade surplus
While the financial services trade surplus has come down from the heights of £46bn in 2008 and £40bn in 2009, it is likely to have reached £36bn in 2010 – still the largest contributor to the current account of the balance of payments and offsetting close to half the goods deficit of £80bn.
While the financial services trade surplus has come down from the heights of £46bn in 2008 and £40bn in 2009, it is likely to have reached £36bn in 2010 – still the largest contributor to the current account of the balance of payments and offsetting close to half the goods deficit of £80bn.
Tightening office market in central London
Despite concerns about the long-term competitiveness of the capital, central London has remained a popular location for firms with office take up rising steadily through 2009. A number of major firms, such as J. P. Morgan and Bloomberg, have made major long-term commitments in 2010. Along with rising demand shortage of new supply has played a part but vacancy rates have nonetheless declined to 7% in the City of London and Docklands by the end of 2010.
Despite concerns about the long-term competitiveness of the capital, central London has remained a popular location for firms with office take up rising steadily through 2009. A number of major firms, such as J. P. Morgan and Bloomberg, have made major long-term commitments in 2010. Along with rising demand shortage of new supply has played a part but vacancy rates have nonetheless declined to 7% in the City of London and Docklands by the end of 2010.
Rising IPOs
Following two years in the doldrums, IPOs at the London Stock Exchange totalled over £10bn in 2010.
Following two years in the doldrums, IPOs at the London Stock Exchange totalled over £10bn in 2010.
Increase in foreign exchange trading
Forex trading was up in the six months to October with the UK’s global share edging up to just over 37%.
Forex trading was up in the six months to October with the UK’s global share edging up to just over 37%.
These indicators provide positive pointers for the UK economy as a whole given that the financial sector has a pivotal role in supporting business, people and government in the process of economic recovery.
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