This report weighs up the arguments put forward by the financial sector’s supporters and detractors and analyses its role in the economy. The results of this analysis have some important implications for current debates about the future of the financial sector.
Since the ‘big bang’ in the City of London in 1986, there has been a large increase in the role of financial services in the UK economy. Lobbyists for the financial sector argue that Britain is good at finance and that we should exploit our comparative advantage in this area to the fullest extent. Before 2007, this view attracted wide support. The strength of the financial industry in the UK was seen as an important bulwark at a time when manufacturing was struggling to compete with low-cost production in emerging economies