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Around 34 percent of exports by banks and finance companies went to America in 2020, according to research by the banking lobby group TheCityUK, compared to 30 percent to the EU. The US was in pole position for the first time since it started collecting data in 2016. Experts said the shift is evidence of growing American interest in Britain as companies eye new opportunities.
Trystan Tether, a lawyer at Bird & Bird, said he had also noticed a great deal of inward investment from the US into the UK, particularly in the financial technology industry where he said that “the UK continues to represent an attractive market”.
Britain’s overall trade surplus in financial and related professional services increased by 8.4 percent to £79.3bn in 2020 as a drop in exports to the EU was offset by a rise in those to the US.
The shift away from the bloc is likely to continue in 2021 as Brexit weighs on exports to the EU, and British trade negotiators make stripping down barriers to services a key focus of their efforts to strike fresh deals with other countries.
Politically, the UK is seeking to secure a trade deal with the United States.
However, US President Joe Biden has warned Prime Minister Boris Johnson that until the ongoing situation surrounding the Northern Ireland Protocol is settled, the UK will remain at the “back of the queue.”
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A recent report by Express.co.uk however revealed that Britain’s tech industry is booming, with Cambridge becoming the EU capital for so-called Unicorn enterprises, namely, a company valued at over £850bn ($1bn).
Yet it is in banking and financial services that Britain is once again started to excel, particularly in relation to the US.
Total financial sector exports to the US – which include financial services, pensions and insurance – were just shy of £15bn in the first six months of the year, versus less than £11bn exported to the EU, according to calculations based on data from the Office for National Statistics (ONS).
The reversal is likely to be seized on by Brexit supporters as a vindication of their claims that the City could prosper outside the bloc.
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Opponents argued that London’s status as a financial hub would be at risk if Britain voted Leave, claiming as many as 200,000 jobs could be lost because banks and other companies would be shut out of the European market.
Although some financial institutions and staffers left London, the data emerging shows that London still remains an important global financial hub, as shown by the ongoing growth demonstrated with the US.
In fact, analysis by ‘TheCityUK’ shows that the capital remains much busier than any financial centre on the Continent.
The British banking industry had assets of £10.8 trillion at the end of June this year, ahead of France and Germany, while the UK’s legal services market is the second-largest in the world after the US.
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Meanwhile, London accounts for 16 percent of cross-border bank lending – the largest share in the world – and handles 43 percent of the global trade in currencies, including more than twice as many dollars as America.
The insurance industry is the fourth largest in the world and the biggest in Europe.
Selling more services, particularly those provided by the City, will be crucial if Boris Johnson’s government is to hit its ambitious target to reach £1 trillion of overall exports per year by 2030.
The UK’s total exports of goods and services stood at about £601bn last year.
Britain is already the world’s second-biggest exporter of services, but the pandemic has put the sector under pressure.
More than three times as many companies blamed the Covid crisis for their problems as Brexit, according to the ONS.
However, this phenomenon is not reflected solely in London or the UK, and has had a similar impact across the globe.
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The latest figures came as figures from Knight Frank showed that American investors have invested more than £1bn in London real estate since October.
US private equity behemoths including KKR and Blackstone have led to spending in the capital as the loosening of travel restrictions reinvigorates the market.
The figures include a £112m deal to buy the Heal’s department store on Tottenham Court Road by KKR after it scented an opportunity in the heart of London’s shopping district.
Shabab Qadar, London research partner at Knight Frank, said that big investment deals have been driven largely by US investors attracted by the improved outlook for the London economy and rising occupier demand for high-end buildings.
Added to this is the notion that London is geographically located between the US and Asia, making it an important physical and time-specific location for financial trading.