UK Financial Services Sector Has Lost Its Edge, BCG Report States
A new report by Boston Consulting Group (BCG) indicates that the UK's financial services sector has underperformed significantly over the past 15 years. Key issues identified include increased regulation, reduced business lending, and lagging technology investment.
The UK's financial services sector has experienced a significant decline in its competitive edge over the last 15 years, according to a new report by Boston Consulting Group (BCG). While the sector remains a major global player in asset management and financial services exports, its contribution to the UK's overall economic growth has weakened considerably.
BCG's analysis reveals that the financial sector is no longer a primary driver of economic expansion for the UK, but rather a drag on productivity. The report estimates that if the sector had maintained its pre-bubble growth trajectory, it would be 40% larger today, contributing an additional £66 billion in output and £100 billion to the wider economy.
The report attributes this underperformance to three main factors. Firstly, increased regulation has fostered risk aversion and limited customer access to certain financial products. Secondly, access to business credit, particularly for small and medium-sized enterprises (SMEs), has become structurally more difficult. Finally, the UK has lagged behind other major economies in investing in technology.
To regain its competitive standing, BCG recommends coordinated actions from both the government and private firms. The report highlights the need to embrace emerging global trends such as agentic AI, digital asset infrastructure, and platform-based competition. These advancements present opportunities for innovation and modernization within the UK's financial services industry.