UK finance has lost 10,000 firms since 2020, study shows
UK finance has lost 10,000 firms since 2020, study shows
The UK’s financial sector has contracted significantly since 2020, with nearly 10,000 firms disappearing in just four years, according to new data from The Payments Group (TPG). The decline signals a deeper structural shift within the industry, extending beyond the economic fallout of Brexit and the pandemic.
The report, based on UK Office for National Statistics (ONS) data spanning 2010 to 2024, paints a stark picture: after years of growth, the sector has entered a period of consolidation, technological disruption, and business failures. Banking, financial management, and auxiliary financial services are among the hardest-hit segments.
“The simple truth is that UK finance is shrinking, and this is not just about Brexit or COVID,” said Jens Bader, CEO of The Payments Group. “We are seeing a shift in the industry’s foundations—one that could have lasting consequences for the broader economy.”
A Decade of Growth Unraveling
The UK finance industry reached its peak in 2020, when the number of registered financial firms hit 88,875. Since then, a net 9,835 businesses have been lost, an 11% decline that underscores growing pressure on the sector.
The data suggests three distinct phases in the UK finance industry’s trajectory since the 2008 financial crisis:
- 2010–2014: Slow recovery following the crash, with steady but modest sector growth.
- 2014–2020: Peak finance—a period of expansion, fintech proliferation, and increased global investment in UK financial services.
- 2020–present: Industry contraction, driven by regulatory pressures, technology-driven displacement, and macroeconomic uncertainty.
Tech Disruption and Policy Challenges
The decline of high-street banking has long been a reality, but TPG’s findings suggest that this trend alone does not account for the broader contraction in the financial sector. Instead, a mix of factors is reshaping the landscape:
- The rise of non-UK financial technology firms, including American giants such as Apple and Google, which are tightening their grip on the UK payments ecosystem.
- Regulatory and compliance burdens, particularly in areas like anti-money laundering (AML) and financial crime prevention, which have increased operational costs for smaller firms.
- Market shifts away from traditional financial services, with mortgage finance emerging as one of the few growth areas, reflecting the impact of rising interest rates and sustained housing demand.
While industry leaders have long warned of overregulation, TPG argues that the UK government must take a more active role in safeguarding financial sector competitiveness.
“The dominance of US payments firms and card networks is eroding the UK’s financial independence,” Bader said. “Without strategic intervention, we risk ceding even more ground to external players at the expense of domestic institutions, retailers, and consumers.”
This article is sourced from the following link:
https://www.accountancyage.com/2025/02/21/uk-finance-has-lost-10000-firms-since-2020-study-shows/
