Scottish business bosses optimistic for growth, KPMG finds

Financial services leaders in Scotland are more positive about the sector’s future growth under the new government, according to KPMG’s latest UK Financial Services Sentiment Survey. The quarterly poll, which was conducted after the General Election, tracks sentiment among over 150 leaders working across banking, insurance, asset and wealth and private equity in the UK including Scotland. Of those surveyed in Scotland, 75% were quite confident of growth prospects this quarter, driven by expected growth in demand for services and plans to enter new markets. The firms said the biggest challenges that could impact this potential growth were inflation and keeping up with advances in technology. Areas identified that could support this expected growth included greater investment in regional infrastructure and granting local government more powers to support local financial services clusters. Finally, Scottish firms said they were a lot more positive for the future of financial services post the general election. Karim Haji, global and UK head of financial services at KPMG, said: “A change of government always marks a new chapter for the country and one of its most important sectors. Most financial services leaders are forecasting a brighter future under the new government, buoyed by both the prospect of national change and continuity of financial services policy and reform. “In the coming weeks and months, the sector will want to see more details emerge on the government’s strategy for financial services, greater partnership between it and sector leaders to collaborate on addressing challenges and a co-ordinated plan to strengthen the UK’s competitiveness as a global financial centre.” KPMG’s survey also found the vast majority (90%) of leaders plan to increase their footprint outside of London in the next five years. Over half (57%) plan to open new offices outside the capital and 48% say they will expand existing regional offices. Almost a quarter (23%) plan to expand across the East of England, followed by 18% eyeing expansion in Scotland and Yorkshire and the Humber. Despite their own plans, Manchester was the city outside of London cited most (47%) by leaders as having the greatest potential to be the UK’s second city for financial services, followed by Birmingham (20%) and Edinburgh (11%). Katie Clinton, partner, head of regional financial services at KPMG UK, said: “This is a vote of confidence for the vibrant and fast-growing financial services hubs outside of London. To fully realise the opportunity they offer the sector, investment in the infrastructure and talent underpinning their expansion is sorely needed. “Cities like Manchester, Birmingham and Edinburgh have long been snapping at London’s heels, so it’s great to see firms are also planning to increase their presence in areas outside of urban centres. This will not only offer a boost to more local economies, but help firms to benefit from a greater diversity of experiences and skills sets.” Leaders also called out specific areas of focus to ensure sector growth over the next five years. Almost a quarter (23%) said innovation to help solve environmental and socio-economic changes such as climate change and ageing populations was needed. This was followed by 21% saying more effort was required to make the UK more attractive to overseas talent through infrastructure investment, housing and immigration changes. Haji added: “Despite all of the discussion and much needed industry focus on making London a more attractive listing destination in recent months, it’s clear that innovation and attracting talent should be given equal billing if the sector’s positive growth expectations are to be realised in the long term.”