Net exports of the UK financial sector rose by 30% to a record £38.8bn in 2007. The annual IFSL report UK Financial Sector Net Exports 2008 noted that banks’ earnings of £23.2bns provided the core of net exports, 60% of the total.
Banks were lifted by the first-time inclusion of FISIM exports totalling £7.8bn. Banks also generated buoyant spread earnings of £9.5bn from derivatives, securities and foreign exchange trading, which were up over a third from £7.0bn in 2006. Elsewhere, the contribution of insurance to net exports rose to £5.5bn, securities dealers to £4.8bn and fund managers to £4.1bn. Shipbrokers’ net exports rose slightly to £769m, while other financial services fell to £417bn.
The onset of the credit crunch in the fourth quarter of 2007 had little impact on the financial services’ trade surplus up to mid-2008: this surplus (from which the financial sector figures are derived) reached a new high of £21.1bn in first half of 2008, 28% up from £16.5bn in the same period of 2007.
Duncan McKenzie, IFSL’s Director of Economics, said: Following a strong first half, financial services’ trade surplus for the second half of 2008 may be reduced by turmoil in global financial markets and the slowing global economy. Even so, UK financial sector net exports in 2008 are likely to be at least the same as 2007, in the region of £40bn.
Over and above financial sector export earnings, the trade surplus generated by professional services - legal and accounting services and management consultancy – rose to £6.3bn in 2007 from £5.5bn in 2006.
|
UK
financial sector net exports |
|
|
|
%
change |
|
£ |
2005
|
2006
|
2007
|
2007 |
|
Banks |
14929 |
17662 |
23216 |
31 |
|
Fund managers |
2105 |
2625 |
4124 |
57 |
|
Insurance |
1652 |
4132 |
5529 |
34 |
|
Securities dealers |
2266 |
2983 |
4785 |
60 |
|
Baltic Exchange |
735 |
706 |
769 |
9 |
|
Other financial services |
2696 |
1716 |
417 |
-76 |
|
Total financial sector net exports |
24383 |
29824 |
38840 |
30 |
Background:
- UK financial sector net exports
UK financial sector net exports are derived from adjustments made to the conventional presentation of trade in financial services for the UK economy. - FISIM: Financial Intermediation Services Indirectly Measured
FISIM is a key aspect of trade in financial services and is separately identified for the first time in the 2008 edition of the UK Balance of Payments yearbook: The Pink Book. FISIM represents the implicit charge for the services to overseas residents related to borrowing and lending that are provided by banks and paid for by the interest differential between borrowing and lending rather than by fees and commissions. FISIM is exported by UK banks and largely imported by private non-financial corporations and households.
