Financial services exports to the EU rise, defying doomsayer predictions

Fri 3 Sept 2021
Posted by: Noelle McElhatton
Trade News

Food and drink exports to the EU may have declined in the first half of 2021, but in the first three months of the year exports of financial services to the EU increased, despite warnings that the City would be hit by a collapse in trade.

Data from the Office for National Statistics (ONS) provided some relief for the country with news that the bloc imported 1.4% more from UK banks, insurers and other finance firms in the first three months of 2021 compared with the same period of 2019. 

According to the Telegraph, the figures undermine claims that Brexit would devastate the Square Mile’s ability to trade with the Continent. 

City boost

ONS data noted a £0.08bn increase in financial services exports to the EU and a reduction in imports from EU countries by £0.57 billion (35.2%) in Q1 2021 compared with Q1 2019. This has resulted in a 10.4% decline in EU composition of the world total of financial services imports to 25.3%.

Companies in Netherlands, Ireland and France suffered the biggest losses in financial trade with Britain.

As previously covered in the IOE&IT Daily Update, the EU-UK Trade and Cooperation Agreement signed last year did not cover financial services. The two parties have been involved in protracted dialogue about an ‘equivalence’ deal where both recognise the regulatory regime of the other.

Without this agreement, it was feared that the UK financial services sector would suffer a massive loss of jobs and business. However, the exodus of jobs has so far been much lower than the 232,000 predicted.

Shoppers return

In another boost to the economy, retail figures enjoyed an August bounce with highest footfall since the first lockdown, reports the FT. Staycations and returning to the office are credited with the 10% rise, along with the relaxation of mask-wearing and self-isolation rules in England on August 16.

The uplift is particularly good news as footfall seemed to have flatlined in the previous three months.