Financial and Business Services Sector
Taken together, the financial services and business services sectors are amongst the most successful sectors in the UK economy in terms of employment creation, output, growth and profitability. Since 1980, the number of jobs in the sector has risen from 1.6 million to 2.8 million; the real output has doubled from 11 to 20 per cent of current-price GDP, and gross profits to almost ?90 billion (Barron, 2004). This expansion was due to several factors, including growing consumer wealth, deregulation and demographic changes, as well as the trend in advanced economies towards services. Financial services output, as measured by percentage of GDP, was predicted to overtake that of manufacturing some time in 1996 (Bell, 1999). The financial services sector is made up of three interlinked and interdependent subsectors: retail, corporate, and City of London. It includes banks, building societies, insurance companies, mortgage lenders, securities houses, unit and investment trusts and increasingly a large number of non-bank institutions engaged in financial activity.
The business services sector includes a wide range of professional firms such as solicitors, management consultants, accountants and computer specialists. Although both these sectors are usually considered separately, they are interlinked in two critical ways: they buy services from one another, for example, the banking sector is one of the largest client groups for accountants and software services; they are beginning to compete for business; the movement of financial institutions into professional services is a major trend. For example, the Halifax Building Society now owns one of the largest surveying companies in the UK; and Barclays Bank has set up a large software services consultancy through outsourcing parts of its IT department.