Growth Sector Briefing - Financial and Business Services



Growth Sector Briefing - Financial and Business ServicesOffice of the Chief Economic Adviser17 December 2021Growth Sector DefinitionScotland’s Financial and Business Services industry was identified in Scotland’s Economic Strategy as one of the growth sectors in which Scotland can build on existing comparative advantage and increase productivity and growth. Scotland is internationally recognised as the most important UK financial centre outside London and the South East, with a breadth of financial services including global custody, asset servicing, banking, investment management, corporate finance, general / life assurance and pensions. Business services is also a crucial sector for Scotland, having grown in recent years to comprise a large and diverse range of professional services.The Financial and Business Services growth sector is defined by the Standard Industrial Classification (SIC) 2007 codes:64.1 - Monetary intermediation64.3 - Trusts, funds and similar financial entities64.9 - Other financial service activities, except insurance and pension funding65 - Insurance, reinsurance and pension funding, except compulsory social security66 - Activities auxiliary to financial services and insurance activities69.1 - Legal activities69.2 - Accounting, bookkeeping and auditing activities; tax consultancy70.2 - Management consultancy activities71.129 - Other engineering activities (not including engineering design for industrial process and production or engineering related scientific and technical consulting activities)73.2 - Market research and public opinion polling74.3 - Translation and interpretation activities78.109 - Activities of employment placement agencies (other than motion picture, television and other theatrical casting) n.e.c.78.3 - Other human resources provision82.1 - Office administrative and support activities82.2 - Activities of call centres82.3 - Organisation of conventions and trade shows82.91 - Activities of collection agencies and credit bureaus82.99 - Other business support service activities n.e.c.Key StatisticsRecent trends in GDP (2021 Q3)Updated December 2021, next update March 2022The latest GDP data show that output in the Financial and Business Services growth sector increased by 0.3% in the most recent quarter, whereas output across the economy as a whole increased by 1.0%. Compared with the same quarter in the previous year, output in this sector increased by 7.1%, the same rate as the economy as a whole, comparing Q3 2021 to Q3 2020.Employment (2019)Updated December 2020, next update January 2022Employment in the Financial and Business Services growth sector stood at 236,000 in 2019, accounting for 9.1% of employment in Scotland and 7.0% of employment in Financial and Business Services across Great Britain. Employment in this sector decreased by 4.5% over the latest year in Scotland.Employment across Scotland (2019)Updated December 2020, next update January 2022In 2019, employment in the Financial and Business Services growth sector was highest in City of Edinburgh (60,000) and Glasgow City (59,000), which comprised 25.4% and 25.0% of employment in this sector respectively.Exports (2019)Updated November 2021, next update tbcTotal exports from the Financial and Business Services growth sector stood at ?16.0 billion in 2019, accounting for 18.3% of Scotland’s total exports. Exports from this sector increased by 2.1% over the year.Exports to the rest of the UK stood at ?11.8 billion in 2019 and accounted for 73.9% of total Financial and Business Services exports. International exports to the EU stood at ?1.3 billion (8.4%) and international exports to non-EU countries stood at ?2.8 billion (17.7%).Enterprises (2021)Updated December 2021, next update December 2022In March 2021, there were 26,585 registered enterprises operating in the Financial and Business Services growth sector, representing 14.9% of all registered business in Scotland. In 2021, 97.5% of Scottish Financial and Business Services registered enterprises were small (0-49 employees), accounting for 33.4% of employment in this sector, whilst large enterprises (250+ employees) accounted for 1.1% of registered enterprises but 56.1% of employment.The majority of enterprises in the Financial and Business Services sector were UK owned with their registered office address in Scotland (97.0%), accounting for 61.3% of sector employment in 2020. 1.6% of businesses were registered abroad, but they accounted for 19.4% of employment in this sector.Earnings (2020)Updated December 2020, next update January 2022Median weekly full time earnings across the Scottish Financial and Business Services growth sector stood at ?632.4 in 2020, which was higher than the Scottish average at ?592.7. Between 2019 and 2020, earnings in the Financial and Business Services growth sector increased by 2.1%.Research and Development (2020)Updated December 2021, next update December 2022Business Enterprise Research and Development (BERD) spending in the Financial and Business Services growth sector stood at ?207 million in 2020. Spending on Research and Development in this sector represented 14.4% of the total BERD spend in Scotland in 2020 (?1,437 million).Business Demography (2019)Updated March 2021, next update March 2022The number of registered business births (VAT/PAYE registrations) in the Financial and Business Services growth sector in Scotland increased by 17.2%, from 4,180 in 2018 to 4,900 in 2019. The business birth rate, which is the number of births as a percentage of active businesses, was 14.2%. In comparison, business births in Financial and Business Services across the UK increased by 15.4% between 2018 and 2019, with a birth rate of 15.4%.The number of business deaths (VAT/PAYE de-registrations) in the Financial and Business Services growth sector in Scotland increased by 19.9%, from 3,625 in 2018 to 4,345 in 2019. The business death rate, which is the number of deaths as a percentage of active businesses, was 12.5%. In comparison, business deaths in Financial and Business Services across the UK increased by 14.5% between 2018 and 2019, with a death rate of 13.3%.The Scottish five-year survival rate for Financial and Business Services businesses born (registered) in 2014 and still active in 2019 was 41.7%, compared to 40.8% for the UK. The latest Scottish one-year survival rate, for businesses born in 2018 and still active in 2019 was 89.2%, compared to 87.3% in the UK.Sources of informationGDP – Scottish Government Quarterly GDP Index.Employment – Business Register and Employment Survey.Exports – Export Statistics Scotland.Turnover & GVA - Scottish Annual Business Statistics.Enterprises – Inter Departmental Business Register.Earnings – Annual Survey of Hours & Earnings.Research and Development – Business Enterprise Research and Development survey.Business Demography - Inter Departmental Business Register and ONS Business Demography.All data are available from the Growth Sector Statistics Database: percentages and percentage changes over time are calculated based on the rounded figures shown in the Growth Sector Statistics Database.For more information about the methodology behind the Growth Sector Statistics Database, please see the Methodology Note: ................
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