Financial sector key to GDP growth – will it influence Brexit talks?
by Bija Knowles
Recent official figures confirm that the UK's financial and business services sector is one of the main drivers of economic growth. The Office of National Statistics (ONS) released figures yesterday showing that business services and finance grew by 0.9 per cent between October and December 2017, making the sector one of the main drivers of Britain's GDP growth. The figures also show that overall GDP growth has been revised down from 0.5 per cent to 0.4 per cent, but growth in the business services and finance sector was revised up from 0.8 per cent to 0.9 per cent.
Customs Union 'not the only way'
British ministers in charge of Brexit are currently opposed to the UK remaining in the Single Market or the Customs Union and this morning one minister ruled out any kind of customs union with the EU after Brexit, saying there would be another way to achieve “frictionless trade” through a free trade agreement. Jeremy Hunt, Conservative MP and Health Secretary, told the BBC that a customs union was "one way of getting frictionless trade but it is not the only way".
However, with Britain outside the Single Market, UK-based banks and other financial service providers would lose their 'passporting rights', which allow them to trade in other EU countries without bureaucratic restrictions. While the government remains fixed on taking Britain out of the Single Market and Customs Union for political reasons, this would almost certainly threaten London's status as a global financial centre.
Importance of financial services in Brexit talks
Head of UK Finance, Stephen Jones, released this statement: “Financial services are one of the key drivers of growth in the UK economy, generating jobs and vital tax revenue. This is a timely reminder of the importance of financial services in talks over a future EU-UK agreement. An ambitious free trade deal, underpinned by the mutual recognition of closely aligned standards, will help drive jobs and growth both in the UK and across the continent.”
CTMfile take: What kind of agreement would take the UK outside the Customs Union and the Single Market - but still allow the City/financial services/banking industry in the UK to flourish and maintain its importance, not just as a global financial hub but also as a key driver of the UK's GDP growth?
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