Financial services recovery would drive UK economy and jobs - PwC

LONDON Mon Jul 22, 2013 12:05am BST

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LONDON (Reuters) - A properly run financial services industry would generate a quarter of a million new British jobs by 2020, oiling the wheels of sectors such as manufacturing and retail, a new report says.

Research published on Monday by PricewaterhouseCoopers (PwC) suggests that robust regulation and benign economic conditions that help the embattled financial sector to recover would also spur 2-3 percent growth in the economy by the end of the decade.

An alternative scenario, in which the financial services sector continues to languish, would bring an unimpressive 0.2 percent rise in gross domestic product and create only 12,000 more jobs, the report said.

"In addition to providing credit, (the financial services industry) creates demand in other sectors and helps improve the flow (of) capital around the economy," said Nick Forrest, an economist at PwC.

"A well-functioning financial services sector improves both capital efficiency and overall UK productivity."

PwC's report says that good regulation coupled with a robust economic backdrop would generate 47,500 new jobs in financial services such as banking and insurance by 2020.

The knock-on effect of a recovery in the financial industry, would be 45,900 more manufacturing jobs, 41,600 in retail and 67,400 in general services, it said.

The region benefiting most from this level of job creation would be London, with 132,800 new jobs by 2020. The region to benefit least would be Northern Ireland, creating only 2,900 new jobs.

(Reporting by Chris Vellacott; Editing by David Goodman)

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