![]() London has been a global financial capital since the 17 th century ( Neal and Quinn, 2001). What does the City contribute to the UK economy? A broader definition of the sector includes related professional services such as accounting, legal services and management consultancy. The financial services sector includes a gamut of institutions including banks, insurers and investment fund managers. ![]() Figure 1: Regional financial services output by country and region, 2020 Indeed, 19% of London’s total economic output comes from the City ( Hutton, 2022). Most of that is concentrated in the square mile that is the City of London. Economists use the expression because, as Figure 1 shows, over 53% of financial services output in the UK is in London. The City is shorthand for the UK’s financial services sector. In addition, the proposal to reduce the top rate of income tax to 40% – which has now been reversed – may have been partly driven by the hope of attracting talent into the UK’s financial services sector. Kwasi Kwarteng also promised further deregulatory reforms in the months to come. Indeed, the fear of global banks taking their business from London to Frankfurt, Paris or New York was his justification for removing the cap on bankers’ bonuses. ![]() In the Chancellor’s recent ‘ mini budget’ speech, he said that ‘a strong UK economy has always depended on a strong financial services sector’.
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