Warning over 'regulatory burdens'
More than a quarter of a million extra jobs could be created if Britain's financial services sector is allowed to flourish and is not held back by over-regulation, according to a report.
PricewaterhouseCoopers (PwC) said "sustainable and well-regulated growth" in the financial sector had the potential to lead to 265,500 more jobs and contribute an additional £50 billion to the wider economy by 2020, helping push gross domestic product (GDP) 2% to 3% higher.
But it warned that if the sector is held back by regulatory burdens and weak global economic conditions, it may only contribute an extra £9 billion to Britain's recovery and create 12,000 jobs.
Nick Forrest, director and financial services economist at PwC, said the finance sector plays a "critical role in the UK economy". He added: "In addition to providing credit, it creates demand in other sectors and helps improve the flow of capital around the economy. A well-functioning financial services sector improves both capital efficiency and overall UK productivity."
But Kevin Burrowes, UK financial services leader at PwC, said some of the current reforms of the industry threaten to hold back its potential.
He said: "Many aspects of financial services reform are currently constraining the advice and products financial services institutions can offer to customers, making competition improvement in the sector difficult to achieve.
"While limiting the likelihood and impact of future crises must be a top priority, better regulation does not necessarily mean more regulation."
The research suggests the finance sector could create jobs across a raft of industries and regions across the UK, including manufacturing, restaurants and leisure, retail, transport and construction.
Financial services firms provide credit and products to other industries, while the sector also buys a substantial amount of goods and services from other parts of the economy - worth around £90 billion in 2010, according to PwC.
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