Financial services 'can add value to economy'

The UK's financial services sector could offer a boost of some £62 billion to the economy by 2020 as long as it is not hamstrung by excessive or wrong-headed regulation, according to a new report from consultancy body PwC.

This expansion would not be limited to the capital, with Scotland and north-west England also likely to thrive in the right market conditions, reports the Financial Times.

Although the last few years have seen banks and other institutions negotiate relatively choppy waters, with the global economic outlook weighing them down, conditions have improved recently and led to increased optimism across the sector.

PwC claimed the industry could add two to three per cent to GDP by 2020, as well as 265,00 jobs, assuming that conditions do not change drastically over the next five years.

However, the consultancy warned the government that introducing too onerous regulation could leave the sector in shackles and deprive the economy of an essential engine for growth.

The industry is under unprecedented levels of scrutiny following a series of high-profile scandals, but PwC feels that excessive regulatory changes may not be the best approach.

Its predictions are also based on Scotland remaining in the UK, adding another layer of uncertainty to the future of financial services. There would be major implications for Scottish firms if the nation votes for independence, the report indicated.

Kevin Burrowes, PwC's UK financial services leader, said the health of the industry should be of national concern.

"The link between UK financial services sector health and the health of the overall UK economy is undeniable," he added.

A well-functioning financial ecology would add £26 billion to investment, £40 billion to household consumption and £23 billion to exports, according to the study.

For people working in the industry, it will be gratifying to hear that regional hubs such as Manchester could help drive this growth - the West Midlands is also in a strong position.