Things could finally be looking up.
An efficiently-run and impactful financial services sector could create 265,000 new jobs whilst raising gross domestic product by 2-3% in the UK by 2020, according to a report conducted by PricewaterhouseCoopers LLP (PwC) published Monday.
Economists at PwC based their research on two contrasting scenarios:
The first, which focuses on a sustainable environment with well-regulated growth, sees the manufacturing, retail and insurance industries all open up their job markets with the creation of 45,900, 41,600 and 22,300 new positions. London, unsurprisingly, benefits the most as a region with 132,800 jobs expected but, after the south-east, the north-west of England will see the next best impact with 19,400 openings.
Nick Forrest, director and financial services economist at PwC, said: '(Financial services) 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'.
A gloomier outlook is forecast in the second scenario, however, one that is based on a frail economy - both at home and internationally - and set against a regulatory backdrop that does little to encourage growth. Should the financial services industry perpetually languish, then PwC claim gross GDP would rise by a paltry 0.2% creating just 12,000 jobs.
'A thriving financial services sector is essential to the UK economy. It is important that financial services reforms are balanced against the performance of the sector, and its contribution to the overall UK economy', said the UK financial services leader at PwC, Kevin Burrows before warning that: 'Many aspects of financial services reform are currently constraining the advice and products financial services institutions can offer to customers, making competition improvement in the sector difficult to achieve'.
He concluded: 'While limiting the likelihood and impact of future crises must be a top priority, better regulation does not necessarily mean more regulation. The UK needs some re-balancing of financial services regulation to unlock the industry’s potential in a sustainable and stable way to achieve the contribution that financial services can clearly give to the economy'.