{"id":19856,"date":"2022-10-17T01:00:00","date_gmt":"2022-10-17T00:00:00","guid":{"rendered":"https:\/\/www.economicsobservatory.com\/?post_type=question&p=19856"},"modified":"2022-10-17T09:51:18","modified_gmt":"2022-10-17T08:51:18","slug":"how-important-is-the-city-to-the-uk-economy","status":"publish","type":"question","link":"https:\/\/www.economicsobservatory.com\/test\/how-important-is-the-city-to-the-uk-economy","title":{"rendered":"How important is the City to the UK economy?"},"content":{"rendered":"\n

In the Chancellor\u2019s recent \u2018mini budget\u2019 speech<\/a>, he said that \u2018a strong UK economy has always depended on a strong financial services sector\u2019. 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\u2019 bonuses.<\/p>\n\n\n\n

Kwasi Kwarteng also promised further deregulatory reforms in the months to come. In addition, the proposal to reduce the top rate of income tax to 40% \u2013 which has now been reversed \u2013 may have been partly driven by the hope of attracting talent into the UK\u2019s financial services sector.<\/p>\n\n\n\n

What do we mean by the City?<\/h3>\n\n\n\n

The City is shorthand for the UK\u2019s financial services sector. Economists use the expression because, as Figure 1 shows, over 53% of financial services output in the UK is in London. Most of that is concentrated in the square mile that is the City of London. Indeed, 19% of London\u2019s total economic output comes from the City (Hutton, 2022<\/a>).<\/p>\n\n\n\n

Figure 1: Regional financial services output by country and region, 2020<\/h4>\n\n\n
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