TheCityUK’s latest UK Competitiveness Tracker shows a downturn across the market during Q2 2012. TheCityUK is calling on policy makers to act swiftly to repair the Eurozone crisis as the impact is now being felt on the UK's leading export earner, financial services. The Government also needs to make haste in supply side reforms to boost the economic performance.
Within the Competitiveness Tracker those indicators showing a positive shift in Q2 included overall volume of financial services business across the UK, derivatives turnover and office take up in central London. The equity markets had a weaker second quarter, as indices and turnover of UK equities both declined while IPOs and mergers and acquisitions fell. FSA authorisations of firms dropped and credit availability to corporates was also down marginally. Other indicators to decline included employment in financial services and foreign exchange turnover.
Chris Cummings, CEO of TheCityUK, commented:
“This fall in competitiveness will surprise few people and indications are that it will fall again in the third quarter. The reality is that the UK’s economic future is strongly bound up with stability and growth in the eurozone both in the short and long term. And the financial services sector is not immune from this or the wider global economic slowdown.
“The economy is suffering as the eurozone crisis hits business confidence and affects the banking system. UK policymakers must engage constructively in Europe to help solve the region’s economic problems, and exert influence to ensure the UK financial services industry can flourish in the post crisis world.
“But we must also address some deep seated supply-side flaws to boost the UK’s performance. A narrow focus on manufacturing alone cannot be a sufficient answer, and boosting the potential of the service sector in international trade must be key to the UK’s long term prosperity. We need a clear vision for the UK economy. This could include a shift in taxation towards expenditure and environmental taxes, and a clearer and less restrictive approach to regulation.”
TheCityUK’s UK Competitiveness Tracker is a comprehensive summary of the factors that influence the competitiveness of UK financial services and impact on the location of financial services firms in the UK. It includes data on indicators such as IPOs, European M&A activity, employment, office take-up rates and credit availability.