Industry Focus: The golden goose of growth.

The iconic towers of the City of London symbolise the beating financial heart of the UK economy. 

Financial services contributed more than 12 per cent to the nation’s wealth last year – compare that to an industry like fishing that gets a lot more airtime which makes up 0.03 per cent. A sign, perhaps, that bankers and stock traders are not a group the British public particularly warms to. 

But for a government desperately wanting to see growth on the national balance sheet, financial services is the obvious place to start. 

It’s an area of the economy where technology, skills, investment and innovation have traditionally coalesced – creating a golden opportunity to take meaningful steps to adding percentage points to GDP growth. 

More broadly, the government has bet big on encouraging institutional and private funds to invest in Britain to build the homes and infrastructure that’s so desperately needed. Establishing the effective regulatory framework to encourage such investment and provide confidence will be critical and is a central pillar of the government's strategy. 

Whether the government will be brave enough to loosen some of the reins is still to be seen. Deregulation and booms have in the past led to busts – something politicians and the public will be very wary of. 

Boosting the City also raises the potential political risk of giving the impression that the rich are helping the rich get richer – big bonuses, flashy suits and gleaming office blocks don’t play well among a public that are feeling the strain of a cost of living crisis. 

Through the promotion of regional financial hubs such as Manchester, Leeds and others, the government will seek to mitigate that risk and spread the benefits of growth more evening across the country. 

Through the new Industrial Strategy, the government is making ambitious noises about the future of the UK’s financial services sector. 

But the chancellor faces a political and ideological minefield to deliver on that ambition – coupled with global economic headwinds, she will need to carefully navigate the risks ahead, but the potential rewards are hard to ignore.