Brexit risks London losing its top spot in Europe for financial services

29 August 2016

London may in the coming years lose its rank as the most attractive destination for financial services firms in Europe. A new analysis of the effect of a loss of single market access suggests that London will fall from its top spot to become the second most attractive centre – in terms of economic indicators – losing out to Dublin. The loss of financial services exports, and activity, could see up to 0.4% of UK's GDP evaporate by 2030.

The UK EU referendum in favour of Brexit will, according to a new study from PwC, have an adverse effect on the UK economy – although the extent of the economic loss is not yet known. The professional services firm has, however, revised its estimates for the UK near-term economic growth downwards, from 1.9% and 2.3% respectively in 2016 and 2017 to 1.6% and 0.6% respectively. In a new report, titled ‘Global Economy Watch: What does Brexit mean for London, the UK and Europe?’, The Big Four firm analyses the effect of a (possible) Brexit on the competitiveness of London as Europe’s financials services hub.

Ireland is the most exposed EU country to Brexit from a trade perspective

Impact on goods and services
The longer term picture is, according to the firm, conditioned by the deal forged between the EU and the UK. Different possible agreements, from EEA membership to World Trade Organisation rules, will impose either no barriers at all or else considerable barriers. While the effects of decisions will affect generations to come, one possible significant loss to the UK will be the status of London as Europe’s financial centre – particularly, according to PwC, if an EEA level agreement is not reached.

The firm notes that the effect of barriers would be the hardest felt by Ireland, whose exports to the UK as a percentage of GDP stand at close to 20% – divided evenly across goods and services. Cyprus too may be considerably impacted, mainly due to tourism services. The Netherlands exports a range of goods to the UK and only limited services. Major EU economies, such as Germany and France are not expecting to be majorly affected by a loss of market access, although specific industries may find themselves in some strife.

Will London remain the most attractive of the major European financial centres

Loss to London
One area in which the UK does stand to lose out significantly is its capital as regional financial hub. As it stands, according to PwC’s analysis, the capital is currently the most attractive centre of all major European financial centres. In terms of attractiveness, the capital is in all but one indicator above average. Dublin takes the number two spot, falling behind average in domestic credit to private sector. Luxembourg, Paris and Vienna take the number three, four and five spots respectively. In terms of attractiveness, the firm notes, non-financial factors too play a part – such as quality of life, infrastructure, transport, etc – which are not accounted for in the analysis.

Financial services make up over a fifth of the UKs total services exports

Financial services remain an important part of the UK’s export portfolio. The sector represents more than 20% of all services exports, around 10% behind other business services, and well above the export of transport services. The sector has also enjoyed robust growth in value between 2005 and 2015, averaging CAGR of 7.3%. In total the sector represents 3% of the UK’s GDP.

The loss of the EU market access could see London lose its place as the top European financial centre

One of London’s major attractions for financial services firms has been its ‘gateway to the EU’ status. The historical city, with its international flavour, English-speaking primary language, FDI attractiveness as well as history of financial services, among others, have given it the edge over regional counterparts. The loss of passporting, if the EU or the UK decides against single access for the UK, means that one of the primary conditions making London attractive would disappear. The effect, according to the firm’s attractiveness indictor, would mean that London falls to second place, behind Dublin. The loss would be relatively significant, as the capital would move from far out ahead, at around 68 on the index, to around 55 – with Luxembourg and Paris nipping at London’s heels.

Non-EU banks relocating could reduce UK GDP by around 0.4 percent in 2030 relative to the counterfactual

The effect of the UK leaving the EU might also mean that non-EU banks, using London as a stepping stone into the wider EU market, might decide to call it quits on the capital. The impact on financial services GVA could, relative to the UK staying in the EU, mean a drop of up to -2% in the mid-term, with up to -3.3% lost in the longer term. In terms of GDP, a loss of -0.4% may be in the pipeline by 2030.

Richard Boxshall, Senior Economist at PwC, comments, “London’s position as an international financial centre is not by any means purely dependent on EU passporting. Other factors such as access to skills and a strong and stable legal system should see it remain as a leading global financial hub in the years ahead. But the potential loss of EU market access poses a challenge for many financial services firms. Business leaders based in London should focus their efforts on lobbying UK Government and EU politicians to retain as much EU access as possible, including retaining EU passporting rights.”



Project management industry adds £156 billion of value to UK economy

15 April 2019

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.


Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”