UK net exports of financial services fell for the first time in a decade last year as claims relating to Hurricane Katrina slashed earnings from insurance exports.
International Financial Services London (IFSL) reported yesterday that net exports of the sector were £19bn in 2005, a drop of £2.7bn from the year before, and also below 2003 levels.
Net insurance exports saw a significant decrease of £3.4bn, of which £1.9bn came from claims influenced by Hurricane Katrina. Nevertheless, even without this effect, analysts at the IFSL estimated that financial sector net exports would have still fallen by approximately £1bn. Securities dealers and other financial services also saw their exports fall as IFSL economists said an increase in general business led to higher imports of business services.
Banks contributed the largest amount to the sector with net exports of £10bn. But a rise in earnings of banks, fund managers and ship brokers failed to offset falls elsewhere. However, the IFSL said it was unlikely that the drop would have an impact on the UK's position as a leading exporter of financial services.
In 2004, the UK had a large financial services trade surplus of $32.6bn, while other leading economies had deficits.
"I don't think the UK's position in 2005 will change a great deal ... The UK is still miles ahead of other countries," said Duncan McKenzie, director of economics at IFSL. "There is no reason why export figures will not return to growth next year."
