Will financial services drive UK economic growth?

Summary: A foreign policy expert believes the financial services industry is the "jewel in the crown" for the UK economy.

Anybody who keeps up to date on the Markit/CIPS Purchasing Managers' Index will know the UK's economy has been relying a great deal on the services sector of late.

Although manufacturing and construction recovered well in the last quarter, it was the service industry that dragged the country away from a triple-dip recession at the start of the year.

Figures showed that activity in August 2013 rose at its fastest pace since December 2006 and new business growth was at its strongest for more than 16 years.

So, how much of this impressive performance can be directly attributed to the financial services industry?

There is no doubt financial companies have been faring a lot better in recent months, following a torrid few years during the economic recession.

Regulations may have been tightened to ensure another market collapse is avoided, but there is a quiet sense of optimism sweeping through the sector and the future appears bright.

Speaking at the recent New Model Adviser Retreat, US-based foreign policy expert John Hulsman said financial services are the "jewel in the crown" of the UK economy.

There have been suggestions the government is keen to alter the structure of the economy so it is not overly reliant on this particular industry, but Mr Hulsman thinks this cannot be rushed.

"In the medium term, financial services will be absolutely vital and London will continue to be vital," the CityWire-powered news provider quoted him as saying.

"The idea that other regions will pick up the slack is another 20 to 30-year process, if people care about it."

For so long, financial employees have had very little to smile about, with the recession ensuring their jobs remained on a knife edge, but a new study by City & Guilds has shown that people are now far more content.

It compiled a list of the "happiest" professions in the UK for 18 to 25-year-olds and finance and accountancy came in the top ten.