By Claire West
Overseas investors are returning to UK financial service market following the global economic crisis, according to a report published today by UK Trade & Investment (UKTI) and IMAS.
North America dominates the market, owning over half of all overseas-owned UK financial services businesses. The US alone represented 44% of all overseas ownership as at 30 June 2010.
This marks a welcome increase in interest in the UK as a global financial hub. After falling to only 6.5% of all Financial Service Authority authorisations in 2009, the overseas’ share had risen to just over 9% by June 2010.
Sir Andrew Cahn said:
“The Government is committed to a competitive environment for financial services and one favourable to business more generally.
“It is also committed to the promotion of high regulatory standards because it is vital to the stability of the financial sector and the whole economy.
“Action was taken in the Budget to increase tax competitiveness with a reduction in the main rate of Corporation Tax from 28% to 24% over the next four years. By 2014, based on current plans, the UK will have the fifth lowest main rate in the G20 and will maintain its position as the lowest in the G7.”
The report also shows that Asian interest in the UK’s financial sector is increasingly coming from emerging economies such as India, Hong Kong and China.
In addition to long-standing interest from Japan, this has led to Asia becoming the third largest continent in the UK’s financial services, representing 16% of overseas ownership.
Asset management and other ‘City’ institutions remain central to overseas interest in UK financial services, with asset management, hedge funds, private equity and corporate finance making up over a third of total overseas ownership. Fund managers and hedge fund managers are particularly important in this area, having a significant share of the overseas-owned ‘City’ institutions.
The UK’s increasing attractiveness to foreign investors is due in part to a commitment from the Government to make tax rates more internationally competitive.
However, there are many other factors which appeal, including a robust and stable legal and regulatory framework, high standards of transparency and accounting, excellent infrastructure, a deep and highly skilled talent pool, language, time zone, and quality of life.