Trade Bill

Written evidence submitted by The City of London Corporation (TB17)



Submitted by the Office of the City Remembrancer


1. The City of London Corporation works closely with a wide range of stakeholders to promote UK-based financial and professional services (FPS). The FPS sector contributes 10% of the UK’s GVA and it employs an estimated 2.3 million people (1 in 14 UK jobs). Maintaining and further developing global trade and investment, and retaining the City of London’s position as a global financial hub – particularly in the context of increased competition from financial centres such as New York – are key to the future of the industry. Securing this objective requires constant innovation and adaptation.

2. The UK runs the largest trade surplus in FPS of any country in the world. In 2017, the value of this surplus totalled approximately £75bn. In financial services alone, the UK’s trade surplus was £61bn in the same period, roughly equivalent to the combined surpluses of the next three leading countries (USA, Switzerland and Luxembourg). [1]

3. Moreover, the FPS sector’s trade surplus is nearly equivalent to the combined surplus of all other industries in the UK which register trade surpluses (other business services; telecommunication, computer and information services; transport, intellectual property; and smaller surplus-generating sectors). [2] The surplus in FPS trade helps balance the UK’s trade deficit in goods which stood at £143bn in 2019.

4. The City of London’s importance as a global financial centre underpins this output- given the diverse range international business that has chosen to locate in the Square Mile and do business here, the City has always been illustrative of "Global Britain". The City is one of the most important centres for private and investment banking, dominates markets such as global foreign exchange and commercial insurance and is home to a large concentration of international bond trading and fund management. However, the whole of the UK contributes to the success of the sector, with around two-thirds of FPS sector jobs based outside London.

5. The recent pandemic has further emphasised the crucial role that international trade and FPS play in driving the economy. Trade will be one of the catalysts for economic recovery and the FPS sector’s role in underpinning global trade is crucial. Relationships between business, regulators, and Government working together to support a thriving UK international trade environment will be important.


6. Through its Global City campaign, the City Corporation is working to showcase the UK’s offer for FPS and promote the UK as one of the most business-friendly environments in the world. The Global City reinforces the UK’s reputation for excellence in the FPS sector by championing its openness to talent, investment and ideas from across the world. It underscores the uniqueness of the UK’s financial, professional and legal services ecosystem, which allows firms to thrive and makes the UK a desirable place to do business.

7. Innovation has long been at the heart of the UK’s FPS sector. In 2018, London attracted £1.8bn in tech funding (almost twice that of the next European centre). The UK’s fintech scene works with financial centres across the world through fintech bridge agreements with Australia, Hong Kong, Singapore, China and Korea. There are currently 76,500 people employed in fintech across the UK, which is set to reach 105,500 by 2030.

8. Alongside fintech, the UK plays a leading role in the global green finance industry. The London Stock Exchange is currently home to more than 100 green bonds, a similar number of green indices, and was the first to issue certified green covered bonds from China, India and the Middle East.

9. The UK’s regulatory environment provides clear support for innovation. Uniquely among major economy regulatory bodies, the UK’s Financial Conduct Authority has a mandate to support innovation and competition alongside market stability and consumer protection.

10. The UK has international scale in a range of sectors. Locating here brings businesses into the heart of a hub of services, expertise and innovation. Openness to international capital and investment has been a key part of the sector’s past success and is vital to the City maintaining its position as a global financial centre. It is for this reason that UK is the highest-ranking major European economy in the World Bank’s Ease of Doing Business Index (9th globally). The UK is respected around the world as a pragmatic and innovative place to do business, with high standards and integrity. It is these values that the City Corporation seeks to maintain and enhance through its Global City initiative.


11. Brexit will precipitate an inevitable realignment of the UK-based FPS sector’s relationship with the EU. These efforts combined with the knock-on effects of Covid-19 will lead to a recalibration of the UK’s FPS relationships with other jurisdictions. A renewed focus on driving closer relationships with key financial services markets will bring opportunities for increased UK-based FPS access to global jurisdictions. These efforts will also bring risk, not least from reciprocal demands. To ensure the future of the UK as a financial services centre, it is imperative that these parallel processes be coordinated and informed by the FPS sector’s priorities.

12. When assessing, planning and developing bilateral relationships with ROW partners, restricting the UK to a particular format should be avoided. A wide range of potential approaches exist, many of which have been used successfully in the past. The selection of the appropriate approach will, therefore, depend on the nature of the interlocutor, the current status of the relationship, and wider considerations including impact and feasibility as well as the scale of the opportunities for UK-based FRPS and individual sectors and organisations.

13. Free Trade Agreements (FTAs) are the broadest form of bilateral trade agreements. FTAs have the potential to deliver deep long-term gains for partners involved. For the FPS sector, FTAs have historic value in locking-in current market openness, prohibiting certain frictions for example in the transfer of data, and mandating mechanisms for continued dialogue at a regulatory level. The City of London supports the UK Government’s ambition to include services in new FTAs with global markets and encourages the UK to explore opportunities to break new ground in services – developing agreements which evolve with technological change in the markets and address wider societal challenges.

14. The pursuit of FTAs should, however, run in parallel with a renewed focus on developing relationships at a regulatory level. These processes can and should be complementary, and should be viewed holistically. The majority of existing market access barriers in FPS can be addressed through enhanced regulatory cooperation outside an FTA mechanism. To these ends, the City of London supports the UK Government’s focus on Regulatory Dialogues, Economic and Financial Dialogues, Financial Partnerships and Financial Dialogues as important vehicles for progress. Consideration should also be given to the potential for developing deeper links between global financial centres themselves. Analysis shows that non-tariff barriers to trade in services are considerably higher than non-tariff barriers to trade in goods. Reducing such barriers would be beneficial to the UK economy and the long-term competitiveness of the City as a global financial centre, and therefore must be a priority.

15. It is now more important than ever to halt any possible increase in fragmentation as global supply chains face incredible strain. The FPS sector has a key role to play, not only in international trade, but in the recovery post-Covid. Coordinated global action must be underpinned by international frameworks and global regulatory coherence. The City of London Corporation will continue its active engagement with global institutions – IOSCO, Basel, WTO, OECD – and with a focus on building bridges between financial regulators and the sector globally, pressing the case for global solutions to global challenges. This will complement similar engagement taking place with the Government and regulators.


16. Developing strategic objectives for these renewed relationships must begin with thorough analysis of existing barriers access facing the UK-based FPS sector, alongside a valuation of historic precedent. The City of London is working closely through the UK Government’s Expert Trade Advisory Groups (ETAGs) and through the Global Financial Partnership initiatives on these agendas. In addition, the City of London is an active member of other key policymaking fora including TheCityUK’s Market Advisory Groups and the Liberalisation of Trade in Services Committee. The City of London complements these efforts with a sustained programme of in-market activity, coordinated with partner organisations, which seeks to identify key market access issues to address, opportunities for alignment, and build the inter-institutional trust needed to underpin bilateral FPS relationships.

17. The City of London Corporation actively works with Government and regulators to support the trade agenda and removal of market access barriers through various workstreams. Current activity spans across various target markets and aspects of international trade. To support the transatlantic initiatives, Catherine McGuinness (Chair of the City’s Policy and Resources Committee) co-chairs a UK-US Coalition of Trade Associations, created in cooperation with TheCityUK and the Securities Industry and Financial Markets Association, to shape and inform the UK-US Financial Regulatory Working Group. The City Corporation will also soon be publishing a report on market access for UK-based firms doing business in Australia and work will begin shortly on a report which highlights the role of FPS in global trade and how this role could be strengthened.

18. Within targeted priority markets, the City Corporation has developed specific City to City agreements working with city mayors and administrations to focus on key areas for collaboration and mutual benefit. Strong bilateral relationships between major financial centres will lead to increased flows of capital and shared opportunity. In 2017 the City Corporation agreed an MoU with the Tokyo Metropolitan Government to work together to increase trade and commercial opportunities on areas including green finance, asset management and fintech. There are also existing MoUs with Shanghai and Shenzen,

19. In addition, developing strategic objectives will rely on a thorough understanding of the City of London ecosystem itself. Alongside its focus on identifying market access opportunities overseas, the City of London is engaged on a programme of work which seeks to build a comprehensive picture of the interactions underpinning the ecosystem economics which keeps London at the forefront of financial innovation.

JUNE 2020


[2] Manufacturing on physical inputs owned by others; maintenance and repair; construction; personal, cultural and recreational services.


Prepared 26th June 2020