The UK financial services sector: rising to the challenges and opportunities of globalisation

HM Treasury is today publishing an analysis of the critical role that the financial sector must play in helping the UK respond to long-term economic changes: The UK financial services sector: rising to the challenges and opportunities of globalisation.

The paper identifies the key roles of the sector in helping the wider economy and society:

providing UK business with capital and other services, including foreign exchange and payments systems, to take advantage of new opportunities presented by emerging markets such as China and India;
providing UK firms with cutting-edge advice, access to capital and risk management tools to help them invest and move up the value-chain in response to greater global competition and shortening life cycles for products and services;
through the "investment chain", efficiently channelling investment needed by business for innovation to stay ahead of the game in a global economy where technological change is more rapid; and
meeting society’s changing needs in response to long-term changes such as saving for retirement in an ageing population and access to basic financial services for everyone in an economy where this is becoming increasingly essential.

Just as financial services are vital to the UK's future economic success, so the sector itself must continue to reform in the face of enormous long-term challenges - changing the face of financial markets by allowing the development of innovative products, remote access to financial markets and outsourcing.

So today's paper sets out the key challenges for the City and policy-makers over coming years:

promoting further integration of global financial markets while managing the risks of financial instability and financial crime;
meeting the changing needs of the wider UK economy to help it respond to global economic change - generating dynamism and flexibility through its core functions of supplying capital, managing risk and processing payments efficiently;
helping people save for the future, manage risks in their own lives and participate fully in the economy through use of financial services; and
ensuring that the UK financial services sector remains globally competitive.

Stephen Timms, Financial Secretary to the Treasury said:

“The global economy is changing rapidly with new technologies, emerging markets and ever increasing competition. British people and businesses are increasingly looking to the UK financial services sector to help them respond to these changes.

“UK financial services must respond to these demands and to the pressures and opportunities that they too face from new technologies and liberalisation. The Government is working with the sector to help it perform these key functions and to ensure that the business environment in the UK remains an attractive location for financial activity – by maintaining a world-class regulatory system and investing in skills, education and infrastructure".

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