Financial services earn pounds 23bn overseas
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Your support makes all the difference.Britain's financial services industry made record overseas earnings of almost pounds 23bn last year. The industry's contribution to the balance of payments rose by pounds 2bn in 1996 and has nearly doubled during the 1990s, writes Diane Coyle.
Banking and insurance were the biggest net earners. But pension funds' earnings have been growing most rapidly, according to the annual "City" earnings table published by British Invisibles.
The balance of payments surplus generated by financial services helps offset deficits in other areas.
Recent official figures showed there was an overall deficit of pounds 435m last year, with trade in goods in the red by pounds 12.6bn.
In 1995, the latest year for which all the figures are available, financial services was the only category, apart from oil, to record a significant balance of payments surplus, although some others, such as the music business and shipping, recorded smaller surpluses.
Duncan McKenzie, economic adviser for British Invisibles, said: "Further growth in its overseas earnings reflects the consolidation and strengthening of London's leading position in many financial markets."
He said the strong pound would not necessarily dent the sector's overseas earnings this year. Although exports of financial services were vulnerable to the high exchange rate, it would increase the other component of the City's earnings, investment income, in sterling terms.
Both income from services and income from investments increased last year. Services earnings rose pounds 162m to pounds 12.8bn, and investment income by pounds 1.8bn to pounds 9.8bn.
Banks' total net earnings made up ground lost in 1995 partly as a result of the collapse of Barings. They climbed from pounds 5.9bn to pounds 7.1bn in 1996.
The insurance sector's earnings fell slightly last year, from pounds 6.9bn to pounds 6.1bn. This partly reflected the fact that Lloyd's had a more successful year and therefore distributed significant profits to overseas members for the first time in five years.
Net overseas earnings of pension funds jumped by a fifth to pounds 2.3bn, continuing their strong upward path. There were mixed results for other institutional investors, with gains for fund managers but declines for unit and investment trusts.
Securities dealers, whose performance is relatively volatile, had a good year in 1996, with a pounds 432m rise to pounds 2.2bn. The earnings of other traders, including commodity traders and bullion dealers, reached a record pounds 642m.
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