Well run financial services sector could create 14,000 jobs – PwC

A WELL-functioning financial services sector could create 14,000 more jobs in the West Midlands by 2020, a new report has suggested.

The PwC report, Where next? Assessing the current and future contribution of the UK Financial Services sector, is based on two scenarios designed to represent potential futures for the financial services sector and the wider economy.

It suggests that the sector could create 265,000 more jobs across industries including and outside of, financial services and GDP growth of 2-3% in the UK by 2020.

Scenario 1: combines a robust regulatory regime that facilitates FS sector growth with economic conditions that are also beneficial to the FS sector. The FS sector grows at a substantial, but more sustainable rate than it did before the 2007 crises.

Scenario 2: provides an alternative view of the FS sector which is constrained by weaker economic conditions both domestically and globally, as well as a regulatory environment that does less to facilitate growth than that specified in the first scenario.

PwC analysis of the second scenario revealed that a weaker contribution of the UK financial services industry to the wider economy could result in a much smaller GDP rise of 0.2% and only an additional 12,000 jobs.

David Roper, partner and financial services expert at PwC in the West Midlands, said: “The financial services sector has a critical role in the regional and wider UK economy. In addition to providing credit, it creates demand in other sectors and helps improve the flow of capital around the economy. A well-functioning financial services sector improves both capital efficiency and overall UK productivity.

“Business confidence depends upon trust in a well functioning financial services sector.  The greater confidence that businesses have that their future profitability will increase, the more likely it is that they will invest, leading to an increases in the different components of GDP such as consumption and exports.”

Andrew Gray, financial services regional leader at PwC, said the FS sector had contributed both positively and negatively to the UK’s economic growth of the past decade.  

While the sector has contributed significantly to investment and job creation throughout the country, the financial crisis brought to light many unsustainable practices in banks and providers of financial services that have highlighted the need for better regulation, he said.

The challenge now for policymakers is the provision of effective UK and EU regulation that limit the likelihood and impact of any future crises, while allowing both the financial services sector and the wider economy to prosper, he added.