Despite the crisis, wholesale financial services based in countries throughout the European Union will play a crucial role in driving the EU economy towards recovery, according to new research published today that predicts a medium-term revival, albeit in a subdued form.
The fourth edition of The Importance of Wholesale Financial Services to the EU Economy 2009, an annual report authored by London Economics and published by the City of London Corporation, shows that the sector still offers substantial benefits to businesses and consumers in each of the 27 European member states, even at a time of a severe global recession, with the EU still home to some of the world’s largest and most active markets.
Stuart Fraser, Chairman of the Policy and Resources Committee of the City of London Corporation, said: ’The key to economic recovery in the European Union is co-operative action based on hard, realistic measures. The City is in Brussels doing this and is working with others, including the Government and Opposition parties, together with the Mayor of London, and governments and institutions throughout the EU – plus key financial stakeholders - in order to maintain a coherent basis for long-term growth.
‘Financial services provide vital and necessary tools for
international businesses to manage finance, risk and access
investment – and notwithstanding the crisis the sector still
accounts for between a third and a half of the EU’s surplus of all
services.’
Mr Fraser added: ’Of course we need an improved, coordinated
regulatory structure to protect against systemic risk in the
financial services industry – but we also need to retain the
ability to innovate – in a properly managed and transparent way.
Getting this balance right is crucial - for the EU as a whole, and
especially Germany, France, the Netherlands, Spain and the UK,
where the financial sector is a major driver. Any proposed
regulation also needs to be evaluated to avoid unintended and
damaging consequences.’
The report presents a scenario indicating a 6% decline in the sector in 2009 from a 2008 high (when it accounted for Euro 219bn in EU GDP and nearly 1.4 million EU jobs), a modest dip in 2010 before a return to growth in 2011, with recent job losses expected to be made good by 2013.
While wholesale financial services in the EU enjoyed uninterrupted growth for most of the past decade, the current financial crisis is patently having a profound effect on the industry. However, the report notes grounds for optimism; the situation is stabilising as EU firms respond to increased competitive pressures and key business areas such as equity markets and asset management are already showing signs of recovery.
The findings of The Importance of EU Wholesale Financial Services to the EU Economy will be discussed at a high level seminar in Brussels on Tuesday 1 September, where the report will be launched. At the same event there will also be a presentation and discussion of an earlier report (April), Assessing the Effectiveness of Enforcement and Regulation, which examines regulatory effectiveness amongst a number of developed economies. The research found that despite variation in regulatory systems, market outcomes such as cost of equity, size and liquidity of markets, valuation premiums, listings and market cleanliness were comparable in the developed economies examined: UK, US, France, Germany and Australia.
Ends
Background
- Download a copy of the Wholesale Financial Services 09 report
- Download now a copy of April’s Assessing the Effectiveness of Enforcement and Regulation
- For the purposes of this report, wholesale financial services are defined as “the provision of services by financial institutions to corporate clients, investors, institutions and public bodies, as well as to other financial institutions.”
- About the City of London: The City of London Corporation supports and promotes wholesale financial services and business. It also provides local government and police services for workers, residents and visitors to London’s Square Mile business district and also provides valued services to wider London and the nation as a whole including: Guildhall Art Gallery, Barbican Centre, Central Criminal Court at Old Bailey, 4,240 hectares of open space three wholesale food markets and acts as London’s Port Health Authority.
- About Stuart Fraser: Stuart Fraser is Chairman of the Policy and Resources Committee of the City of London Corporation. View his biography or download a photo of Stuart Fraser
Press contacts
James Abbott
Tel: 020 7332 1754
Mob: 07831 543188
Email:
james.abbott@cityoflondon.gov.uk
Sanjay Odedra
Tel: 020 7332 1835
Mob: 07954 327370
sanjay.odedra@cityoflondon.gov.uk