Chris Cummings: Financial services have role in Brexit debate

With the official campaign period under way and less than ten weeks to go until polling day, the countdown to the EU referendum on 23 June has begun in earnest, with strong debate from both sides of the campaign.

Chris Cummings says EU membership has helped secure Scotland's 'reputation for financial excellence'. Picture: Neil Hanna
Chris Cummings says EU membership has helped secure Scotland's 'reputation for financial excellence'. Picture: Neil Hanna

For those of us in financial and related professional services, this momentous vote could have a significant impact on our industry as well as our country.

A vote to leave the EU will see the UK exit the European single market of half a billion customers and head to the negotiating table in an attempt to secure, among other things, trading terms as good as those we currently enjoy. That would be no mean feat, particularly where financial services are concerned. Meanwhile, a vote to remain will sound the starting gun on the implementation of the Prime Minister’s EU reform agenda and its follow up.

It is worth noting that across Scotland there are almost 157,000 people employed in financial and related professional services who together contribute more than 10 per cent – or £13 billion – to the nation’s economy. These aren’t just jobs in Edinburgh or Glasgow; they’re jobs across the whole of Scotland.

Membership of the EU and access to the European single market has undoubtedly helped secure Scotland’s global reputation for financial excellence and its position as one of Europe’s leading financial centres. This is due in no small part to the passporting rights afforded to firms based in the EU, allowing them to seamlessly do business across the whole of the EU.

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Not only has EU membership assisted the growth of Scottish businesses, access to the single market is a huge draw for the international firms that establish themselves in the UK. That includes the worldwide insurance, legal and management consultancy powerhouses that have set up operations in Edinburgh, Glasgow, Aberdeen and beyond.

Leaving the EU may mean giving up tariff-free access to the European single market. While this may not be ruinous for our economy, it risks damaging financial and related professional services, leading to a potential loss of jobs as firms look to establish operations elsewhere in Europe and uncertainty prevails while a new normal is determined.

This matters to every Scottish household because financial and related professional services is the UK’s largest taxpaying sector, contributing £66bn in the last financial year. Trade with Europe accounts for around a third of the industry’s trade surplus of £72bn, which is higher than the combined surplus of all other net exporting industries in the UK.

Given the importance of Europe to our industry’s success, it stands to reason that an overwhelming majority of our sector’s leaders – 84 per cent of them – want to stay in a reformed EU. We know from our research that people want to hear from business on this issue and while it isn’t our place to tell people how to vote, we do have an important role to play in explaining the consequences of different outcomes.

Given the importance of our industry to the broader economy, business leaders in Scotland and across the UK have a central role to play in ensuring people are armed with all the detail they need to make an informed voting decision.

• Chris Cummings is chief executive of TheCityUK