Financial sector boosts Britain's balance of payment position |
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Wed, 20 Jul 2005 23:35
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LONDON: The financial sector in Britain recorded net exports worth 19 billion pounds in 2004, almost trebling the sector's contribution to the country's balance of payment figures 10 years ago.
International Financial Services London (IFSL), a trade body which articulated a study based on official records, said no other advanced country has been able accomplish this rate of growth for the financial sector -- comprising mainly insurance companies, banks and allied financial institutions.
Only Switzerland and Germany had shown trade surpluses in this sector -- that too moderate -- while the U.S., Japan and France are net importers.
The city of London contributed heavily to this achievement, IFSL said, adding the growth in net exports from the city was an "on-going trend over many years". This has actually bridged the widening gap of the the country's trade deficit in view of the increase in the numbers of goods imported.
Duncan McKenzie, director of economics at IFSL, said, "The U.K. trade surplus in financial services is more than double that of any other country, with London's status as an international financial centre a substantial and continuing influence.
"London has consolidated its position as the leading international financial centre in Europe."
The insurance industry has been the major contributor in the export earnings, accounting for a surplus of 6.4 billion pounds, followed by banks, securities dealers and other financial services. Banking-related exports rose in value from 2.8 billion pounds to 3.7 billion pounds, while income from securities dealing rose to 3.6 billion pounds.
The biggest increase has been from the shipbroking industry -- 551 million pounds, marking an increase of 45 per cent.
The U.S. accounted as the biggest single market for the country's financial services, creating a 5.2 billion pound surplus in 2003, while the surplus in the case of European Union was 4.8 billion pounds -- 1.1 billion pounds with France and 895 million pounds with Germany included.
The IFSL study shows that the country's trade deficit continues to deteriorate notwithstanding the performance of the financial services industry. In goods and services it went up from 31 billion pounds in 2003 to 38.4 billion pounds in 2004.
However, the overall current account position (including trade in goods and services, to and from cash transfers and investment inflows) has not shown a deterioration as bad as the goods trade deficit. In this case, the deficit rose from 16.8 billion pounds in 2003 to 23 billion pounds in 2004.
IFSL said besides the exports of financial and business services, growth in investment income from stakes in foreign companies too had a major impact.
McKenzie said equity markets were certainly picking up last year and the U.K. firms have earned increased commission from this recovery.
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